United States securities and exchange commission logo
October 8, 2020
David Baker
Chief Executive Officer
Vallon Pharmaceuticals, Inc.
Two Logan Square
100 N. 18th Street, Suite 300
Philadelphia, PA 19103
Re: Vallon
Pharmaceuticals, Inc.
Draft Registration
Statement on Form S-1
Submitted September
11, 2020
CIK No. 0001824293
Dear Mr. Baker:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1
Company Overview, page 1
1. We refer to your
statements that you intend to pursue a section 505(b)(2) approval
pathway, and that this
path may expedite the development of your programs. Please
expand your explanation
of this process so that investors understand the steps necessary to
achieve FDA approval
using this process. Please similarly revise the pipeline table to
identify the steps
necessary for regulatory approval. Additionally, identify and describe
the studies and results
you intend to rely on, including the identification of the parties that
performed the studies.
Please also disclose whether the FDA has given any indication that
you may use such
pathway for ADAIR.
David Baker
FirstName LastNameDavid
Vallon Pharmaceuticals, Inc.Baker
Comapany
October NameVallon Pharmaceuticals, Inc.
8, 2020
October
Page 2 8, 2020 Page 2
FirstName LastName
2. We note your statements that you completed a pivotal bioequivalence
study of ADAIR as
well as a food effect study and a proof-of-concept intranasal human
abuse potential study.
Please clarify whether these were clinical studies and if so, the
phase of clinical testing to
which these studies correlate. Please also disclose the number of
patients that participated
in each study and each study's primary endpoints.
3. Please disclose the value of the 33,750,000 shares of common stock
that were exchanged
for the ADAIR assets.
The Offering, page 6
4. You indicate at the top of page seven that unless otherwise indicated,
all information in
this prospectus reflects or assumes a reverse stock split of your
common stock to be
effected prior to the closing of this offering. Please address the
following:
To the extent you intend to effect the split prior to the
effectiveness of your
registration statement, we remind you that you must revise your
financial statements
presented to reflect the stock split in accordance with ASC
260-10-55-12 and SAB
Topic 4C. Also, ensure your auditor revises its report on page
F-2 to reference
the stock split and dual-date its opinion in accordance with
PCAOB AU 530.05; and
If the reverse stock split will occur after effectiveness of your
registration statement
but prior to the consummation of this offering, please expand
your pro forma
earnings per share information in your Summary and Selected
Financial Data to
clarify the nature of this pro forma information.
Use of Proceeds, page 53
5. Please revise your disclosure in this section to specify which
candidates will be advanced
with the proceeds of the offering and which clinical trials will be
funded. Please indicate
how far you expect the proceeds from the offering will allow you to
proceed in the clinical
development of your product candidates. If the anticipated proceeds
from your offering
will not be sufficient to complete those trials, please disclose the
amount and sources of
other funds needed.
Controls and Procedures, page 74
6. We note your disclosures regarding disclosure controls and procedures
and internal
controls over financial reporting. Please expand your disclosures and
related risk factors
to address the following:
Disclose the fact that you are not currently required to provide
these assessments;
Revise to clarify, if true, that you performed an assessment of
your internal control
over financial reporting which is a separate assessment from
disclosure controls and
procedures; and
Identify the version of the COSO framework you used to evaluate
the effectiveness of
your internal control over financial reporting, if you performed
one.
David Baker
Vallon Pharmaceuticals, Inc.
October 8, 2020
Page 3
Business
ADHD Condition and Impact, page 80
7. Please revise to disclose the bases for the figures in the table at
the top of page 81.
Existing Treatment Options, page 81
8. In the table on page 81, please provide the percentage of
prescriptions that are immediate-
release and extended-release tablets and capsules. Please also
disclosure what portion of
the $9 billion U.S. market for ADHD treatment was immediate-release
ADHD treatments
that your products are targeting.
Our Solutions, page 85
9. We note the disclosure in the financial statement footnotes that you
have completed three
Phase 1 clinical trials. Please disclose the specific results from all
prior and ongoing trials,
including the duration of each trial, the number of subjects or
patients in such trials, how
the drug candidates were administered, who conducted and/or sponsored
the trials, the
dosages used, and all serious adverse events that were experienced,
including
the number of patients that experienced such SAEs. With respect to the
disclosure of each
such trial, state the primary and secondary endpoints and whether they
were met.
Intellectual Property, page 93
10. With respect to those patents that have been issued, please indicate
the type of patent
protection in each instance, be it composition of matter, use, or
process.
Medice License Agreement, page 93
11. We note your reference here to low double-digit royalties. Please
revise your disclosure to
narrow the royalty range to no more than ten percentage points (for
example, between
twenty and thirty percent). Also disclose the duration of the royalty
obligation and discuss
the termination provisions of the license agreement.
Whitaker Consulting Agreement, page 104
12. Please disclose the terms on the options to purchase common stock that
were granted to
Dr. Whitaker in October 2018 and May 2020.
Principal Stockholders, page 110
13. We note that members of the board of directors and management will
control
FirstName LastNameDavid Baker
approximately 58.4% of the voting power. Please tell us whether you may
be a controlled
Comapany NameVallon
company Pharmaceuticals,
under applicable exchangeInc.
listing standards, and, if so,
whether you will use
Octoberrelated exemptions
8, 2020 Page 3 to governance rules under those standards.
FirstName LastName
David Baker
FirstName LastNameDavid
Vallon Pharmaceuticals, Inc.Baker
Comapany
October NameVallon Pharmaceuticals, Inc.
8, 2020
October
Page 4 8, 2020 Page 4
FirstName LastName
Notes to Financial Statements
June 30, 2020 and 2019 (unaudited)
Note B - Summary of SIgnificant Accounting Policies
2 - Revenue recognition, page F-26
14. You have determined that Medice is a related party and that the
License Agreement was
transacted at arm's-length with the consideration therein determined
to be at fair value.
Please tell us how the representation as to arm's length fair value
was substantiated. Refer
to ASC 850-10-50-5.
General
15. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you or anyone authorized to do
so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
16. The graphic that precedes the table of contents suggests that ADAIR is
an approved
reformulation that is clinically effective. Please revise to remove
any statements that
suggest the safety and efficacy of your candidates, as these
determinations are the
exclusive authority of the FDA or other regulators. In addition, the
graphic includes a
large amount of text. Text in this context should be used only to the
extent necessary to
explain briefly the visuals in the presentation and should not
overwhelm the visual
presentation. Also, the graphics should not include extensive
narrative text that repeats
information already contained in the summary or business sections. For
guidance, refer to
Question 101.02 of Compliance Disclosure of our Securities Act Forms
Compliance and
Disclosure Interpretations and revise accordingly.
17. We note your cautionary statements concerning the representations,
warranties and
covenants made in agreements filed as exhibits to the registration
statement. Disclosure
regarding an agreement's representations, warranties and covenants in
a registration
statement (whether through incorporation by reference or direct
inclusion) constitutes a
disclosure to investors, and you are required to consider whether
additional disclosure is
necessary in order to put the information contained in, or otherwise
incorporated into that
publication, into context so that such information is not misleading.
Please refer to Report
of Investigation Pursuant to Section 21(a) of the Securities Exchange
Act of 1934 and
Commission Statement on potential Exchange Act Section 10(b) and
Section 14(a)
liability, Exchange Act Release No. 51283 (Mar. 1, 2005). If you
continue to use these
cautionary statements in your registration statement, please revise
them to remove any
implication that the agreements do not constitute disclosure under the
federal securities
laws and to clarify that you will provide additional disclosure to the
extent that you are or
become aware of the existence of any material facts that are required
to be disclosed under
the federal securities laws and that might otherwise contradict the
representations,
warranties and covenants contained in the agreements and will update
such disclosure as
David Baker
Vallon Pharmaceuticals, Inc.
October 8, 2020
Page 5
required by federal securities laws.
You may contact Gary Newberry at 202-551-3761 or Jeanne Baker at
202-551-3691 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Chris Edwards at 202-551-6761 or Mary Beth Breslin at 202-551-3625 with
any other
questions.
Sincerely,
FirstName LastNameDavid Baker
Division of
Corporation Finance
Comapany NameVallon Pharmaceuticals, Inc.
Office of Life
Sciences
October 8, 2020 Page 5
cc: Kaoru C. Suzuki, Esq.
FirstName LastName