United States securities and exchange commission logo
March 13, 2023
Rajiv Shukla
Chief Executive Officer
ALPHA HEALTHCARE ACQUISITION CORP III
1177 Avenue of the Americas, 5th Floor
New York, New York 10036
Re: ALPHA HEALTHCARE
ACQUISITION CORP III
Registration
Statement on Form S-4
Filed February 14,
2023
File No. 333-269773
Dear Rajiv Shukla:
We have reviewed your 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 amending your registration
statement and providing the
requested information. 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 any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4, Filed February 14, 2023
Cover Page
1. We note that certain
shareholders agreed to waive their redemption rights. Please describe
any consideration
provided in exchange for this agreement.
Summary, page 14
2. Please disclose Carmell
s current state of operations and history of net losses in this
Summary section.
3. Please revise to
identify the Business Combination Agreement closing conditions that are
subject to waiver.
4. Please provide the
information required by Item 4(a) of Form S-4.
Rajiv Shukla
ALPHA HEALTHCARE ACQUISITION CORP III
March 13, 2023
Page 2
5. Please disclose the sponsor and its affiliates total potential
ownership interest in the
combined company, assuming exercise and conversion of all securities.
Risk Factors, page 24
6. Disclose the material risks to unaffiliated investors presented by
taking the company
public through a merger rather than an underwritten offering. These
risks could include
the absence of due diligence conducted by an underwriter that would be
subject to liability
for any material misstatements or omissions in a registration
statement.
Risks Related to Carmell's Business and Industry
Risks Related to the Development and Regulatory Approval of our Product
Candidates
If we fail to comply with our obligations in the agreements under which we may
license
intellectual property rights from third parties..., page 38
7. Please expand this risk factor to discuss the risks associated with
your dependence on the
CMU License Agreement and consequences of any potential termination
thereof given
you have two product candidates in development and both rely on the
continuation of this
agreement.
Risks Related to New Carmell and the New Carmell Common Stock Following the
Business
Combination
The Proposed Charter will designate a state or federal court located within the
State of Delaware
as the exclusive forum..., page 56
8. On page 56 you state that under the Proposed Charter the forum
selection provision does
not apply for any action asserting a claim arising under the
Securities Act, for which the
U.S. federal courts will be the exclusive forum. On page 242 you state
that the United
States District Court for the District of Delaware is designated as
the sole and exclusive
forum for resolving any action asserting a claim arising under the
Securities Act. Please
revise to reconcile these statements and also revise to state here, as
you do on page 242,
that this provision does not apply to Exchange Act claims, if true.
Risks Related to ALPA, the Business Combination and Redemptions
The Public Stockholders will experience immediate dilution as a consequence of
the issuance of
New Carmell common stock..., page 58
9. Please revise to disclose all possible sources and extent of dilution
that shareholders who
elect not to redeem their shares may experience in connection with the
business
combination. Provide disclosure of the impact of each significant source
of dilution,
FirstName LastNameRajiv Shukla
including the amount of equity held by founders, convertible securities,
including warrants
Comapany NameALPHA
retained by redeemingHEALTHCARE
shareholders, ACQUISITION CORP IIIlevels
detailed in your
at each of the redemption
March sensitivity analysis,
13, 2023 Page 2 including any needed assumptions.
FirstName LastName
Rajiv Shukla
FirstName LastNameRajivACQUISITION
Shukla
ALPHA HEALTHCARE CORP III
Comapany
March NameALPHA HEALTHCARE ACQUISITION CORP III
13, 2023
March3 13, 2023 Page 3
Page
FirstName LastName
Proposal 1: the Business Combination Proposal
Background of the Business Combination, page 70
10. On page 71 you state that you entered into nondisclosure agreements
with 23 potential
business combination targets and, following initial diligence, ALPA
s management
discontinued discussions with 13 of the 16 business combination
targets. Please revise to
explain how you proceeded from 23 to 16 targets. Please also revise to
describe
discussions or negotiations with other material targets in addition to
Company A and B.
11. Please revise the Background section to detail the negotiations
concerning key aspects of
the business combination and related transactions, including, without
limitation, the scope
and valuation of Carmell s business, the merger consideration and
the structure of the
transaction. Include further discussion of the negotiations of the
terms in the term sheet
with Carmell as well. Each proposal (preliminary or otherwise) and
counterproposal
concerning a material transaction term made between October and
December of 2022
should be described and the proposing party identified. In this
regard, we note that the
Background section as written discusses in general terms the topical
areas discussed by
the parties during the negotiations and some of the final terms they
mutually agreed upon,
but does so without any indication of how those terms evolved during
the course of the
discussions/negotiations.
12. Please revise to state whether there were any discussions with Carmell
about the potential
loss of clients in the near future or other events that may materially
affect Carmell's prospects.
13. Please revise to disclose any discussions about the need to obtain
additional financing for
the combined company in connection with the Business Combination
transaction or
shortly thereafter, such as a PIPE transaction, and, as applicable,
the
negotiation/marketing processes. To the extent any financing is
contemplated, please
revise to describe. In this regard, we note that on pages 63 and 104
you refer to the "PIPE
Investment," which is not defined, you state that Carmell is in
default on certain
convertible notes and under the maximum redemption scenario New
Carmell will need
additional financings in order to pay off the convertible notes, will
not have sufficient cash
to pay the cash transaction costs incurred in connection with the
Business Combination
and will need additional equity financings in order to satisfy the
maximum redemption
request as well as to meet the requirement of the minimum net tangible
assets for ALPA.
Additionally, one requirement under the agreement with Puritan, a
convertible note
holder, is that upon entering into such Business Combination
Agreement, such parties
shall have a commitment letter from a third party to provide capital
in an amount
sufficient to the surviving company to the Business Combination to,
among other things,
repay all amounts due and owing at such time to Puritan at the
Closing. Please also revise
to substantiate your statement on page 46 that you believe you will
have sufficient cash to
fund expenditures for the next 12 months.
Rajiv Shukla
FirstName LastNameRajivACQUISITION
Shukla
ALPHA HEALTHCARE CORP III
Comapany
March NameALPHA HEALTHCARE ACQUISITION CORP III
13, 2023
March4 13, 2023 Page 4
Page
FirstName LastName
The Board's Reasons for Approval of the Business Combination, page 75
14. Your proxy/registration statement indicates the Board received
financial projections and
we note on page 78 you state that Cabrillo reviewed certain business
presentations
regarding Carmell prepared by the representatives of Carmell. Please
revise to describe
these projections and business presentations. Please also state
whether there were any
valuations or other material information about ALPA, Carmell, or the
Business
Combination transaction provided to potential investors that have not
been disclosed
publicly, to the extent applicable.
15. On page 79 you state that Cabrillo did not provide advice concerning
the specific amount
of consideration. Please revise to clarify what Cabrillo considered in
terms of the
consideration involved in the transaction or how it provided an
opinion without analysis of
the consideration.
16. Please revise to provide cautionary language noting that the fairness
opinion addresses
fairness to all shareholders as a group as opposed to only those
shareholders unaffiliated
with the sponsor or its affiliates.
17. We note that Alpha Healthcare Acquisition Corp. completed its business
combination.
Please provide balanced disclosure about this record and the outcome
of this prior
transaction as well as any other de-SPAC transaction to the extent
your sponsor and
management and affiliates have a track record with SPACs.
18. We note that Cabrillo analyzed enterprise values of selected publicly
traded companies.
Please revise to provide the enterprise value for New Carmell as shown
on slide 28 in the
presentation attached to the 8-K filed January 4, 2023. Additionally,
please revise page 86
to clarify what is being shown here, including the terms low and high
indication. For
example, it appears that the implied enterprise value for the high
indication of the
Guideline Public Company Method is referred to as the high quartile of
enterprise value
on page 80, and the implied enterprise value for the low indication is
referred to as the
median of enterprise value on page 80.
Interests of the Sponsor and ALPA's Directors and Officers in the Business
Combination, page
87
19. Please revise the conflicts of interest discussion so that it
highlights all material interests
in the transaction held by the sponsor and the company s officers
and directors. For
example, this could include how the exercise of discretion to agree to
changes or waivers
to the Business Combination may affect shareholders or that directors
of ALPA will be
directors of the combined company. In addition, please clarify how the
board considered
those conflicts in negotiating and recommending the business
combination.
Rajiv Shukla
FirstName LastNameRajivACQUISITION
Shukla
ALPHA HEALTHCARE CORP III
Comapany
March NameALPHA HEALTHCARE ACQUISITION CORP III
13, 2023
March5 13, 2023 Page 5
Page
FirstName LastName
Summary of Business Combination Agreement, page 90
20. On page 101 you state that the Termination Date under the Business
Combination
Agreement is August 31, 2021. In Section 7.1(d) of the Business
Combination Agreement
it defines Termination Date as June 30, 2023. Please reconcile
or advise.
Certain Material U.S. Federal Income Tax Consequences, page 103
21. We note your statement that [t]his section describes certain
material U.S. federal income
tax considerations. Please revise your disclosure here to clarify
that this section addresses
the material U.S. federal income tax considerations as opposed to
certain material U.S.
federal income tax considerations.
22. You disclose on page 106 that the parties to the Business Combination
Agreement intend
for the Business Combination to qualify as a reorganization
within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended, and
that if the Business
Combination qualifies as a reorganization, U.S. Holders will generally
not recognize gain
or loss as a result of the Business Combination. If the merger will
not be taxable to
shareholders, please file a tax opinion as an exhibit to the
proxy/registration statement. For
guidance, please see Section III of Staff Legal Bulletin No. 19.
Unaudited Pro Forma Condensed Combined Financial Information, page 115
23. We note balance sheet adjustment (12) reflects the additional required
borrowings to fund
the transaction costs and the payoff of the convertible notes under
the maximum
redemption scenario. Please provide a statement of operations pro
forma adjustment to
reflect any related interest expense and explain the assumptions
involved in the notes.
24. We note in balance sheet adjustment (12) that ALPA may not consummate
any business
combination unless it has net tangible assets of at least $5,000,001
and that the Company
will need additional equity financings. Please provide the
computations of pro forma net
tangible assets under both the No Redemption and Maximum Redemption
Scenarios. In
addition, provide any necessary pro forma adjustment related to these
equity financings
and explain your underlying assumptions in the notes.
25. We note in the Notice of Special Meeting that ALPA will not redeem
Public Shares in an
amount that would cause it to have net tangible assets of less than
$5,000,001. Please
clarify for us why your maximum pro forma redemption scenario does not
reflect this
statement. Refer to Rule 11-02(a)(10) of Regulation S-X.
26. Please disclose whether CMU will have the ability to subscribe for
additional equity
securities so as to maintain their percentage of ownership in the
Company in connection
with this business combination and whether they intend to subscribe
for the additional
equity. Provide any necessary pro forma adjustments.
Rajiv Shukla
FirstName LastNameRajivACQUISITION
Shukla
ALPHA HEALTHCARE CORP III
Comapany
March NameALPHA HEALTHCARE ACQUISITION CORP III
13, 2023
March6 13, 2023 Page 6
Page
FirstName LastName
Basis of Pro Forma Presentation, page 117
27. We note footnote 6 to your table on page 119. Revise your disclosure
here or elsewhere to
disclose the effective underwriting fee on a percentage basis for
shares at each redemption
level presented in your sensitivity analysis related to dilution.
Information about Carmell
CMU Exclusive License Agreement, page 161
28. We note your disclosure that the Amended Exclusive License Agreement
is effective until
January 30, 2028, or until the expiration of the last-to-expire patent
relating to this
technology, whichever comes later. Please revise to state when these
patents are expected
to expire. Please also revise to state the royalty term. We note that
failure to perform in
accordance with the agreed upon milestones is grounds for CMU to
terminate the
agreement, please revise to describe any other termination provisions.
To the extent
applicable, describe any upfront payments and quantify all payments
made to date. We
note that prior to a qualified initial public offering or a qualified
sale CMU has the right to
subscribe for additional equity securities so as to maintain its then
percentage of
ownership in Carmell. To the extent the Business Combination is deemed
a qualified
initial public offering or a qualified sale please revise to state
this ownership percentage
and number of shares CMU will receive. Finally, please define "Minimum
Performance
Requirements."
29. We note that under the CMU License Agreement CMU granted Carmell
exclusive rights
to develop and commercialize plasma-based bioactive material, also
known as
Biocompatible Plasma-Based Plastics for all fields of use and
all worldwide
geographies and that CMU "retains the intellectual property rights to
the licensed
technology including patents, copyrights, and trademarks." Please
clarify the meaning of
the statement that CMU retains the intellectual property rights to the
licensed technology
or whether this arrangement differs from a typical exclusive license
agreement.
Products, page 162
30. Please revise your pipeline table on page 263 to remove the text
within the arrows. You
may include a column for anticipated milestones or other information,
but please also
clarify what EU additional clinical data TBD means. Revise to
make the table more
legible. Clarify which arrow is intended to be a gradient arrow as
mentioned in the
footnotes. To the extent that Carmell has not begun its HEAL II trial
please shorten the
arrow to the end of Phase 1 for the Tibia Fracture Healing indication.
We note your
statement on page 164: We are pursuing a Phase 2 trial for
accelerated bone healing in
severe open tibia fractures and other indications where healing bone
fractures/defects/fusion is needed. The pipeline table suggests
that the Foot/Ankle Fusion
indication has an ongoing Phase 2 clinical trial, but aside from this
statement on page 164
there appears to be no other discussion of this trial. Please revise
the disclosure to provide
Rajiv Shukla
FirstName LastNameRajivACQUISITION
Shukla
ALPHA HEALTHCARE CORP III
Comapany
March NameALPHA HEALTHCARE ACQUISITION CORP III
13, 2023
March7 13, 2023 Page 7
Page
FirstName LastName
a clear discussion of this trial and its application to Foot/Ankle
Fusion or advise. On page
169 you state In the European Union, we intend to pursue a CE Mark
for BHA under the
EU MDR with an anticipated label as a bone void filler. Therefore,
please remove the
EU CE Mark from the table for this indication as it appears
Carmell has not received it.
We also do not see support for the representation of the Bone Void
Filler indication in
Phase 2 trials, please revise to describe this trial or shorten the
arrow accordingly. Finally,
we note that four indications in the table are pre-clinical. Please
tell us why you feel these
indications are material enough to be included in the table.
31. We note your statement on page 163: Although FDA has assigned CBER
as the lead
agency center for premarket review for BHA based on its PBM component,
b-TCP is used
in numerous FDA 510(k)-cleared products. A number of companies market
b-TCP as a
bone filler by itself (e.g., Vitoss, Stryker, MI). Other companies use
it as one of the active
ingredients in their products (e.g., OpteMx, Exactech Biologics,
IsoTis Mozaik,
SeaSpine). In addition, the FDA has approved a combination product
(AUGMENT
Injectable) of b-TCP with a recombinant growth factor through the
premarket approval
( PMA ) pathway. Please revise these and any similar statements
to not imply or suggest
that your product candidates will be approved based on the approval of
these other
products.
Wound Care, page 166
32. In your discussion of Carmell s preclinical trial of THA in rabbits
you state on page 167
that all animals in the THA + antibiotics group were free of purulence
and culture
negative. Please revise to state whether there was a group that
received solely the
antibiotics. In your discussion of Carmell s preclinical trial of
THA in rats you state on
page 167: The endpoint to measure wound size at 17 weeks showed the
THA plus
vehicle arm to have more complete healing and reduction in wound size,
with a
statistically significant smaller average wound size versus those
treated with the vehicle
alone at week 14. Please revise to provide the relevant p-values
and a brief explanation
of how p-values are used to measure statistical significance and how
statistical
significance relates to FDA approval. For both studies please specify
the number of
subjects.
Intellectual Property, page 173
33. In your patent chart please add expiration or expected expiration
dates for each patent.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Financing Activities, page 201
34. We note your description of the Convertible Notes. Please revise to
define the term "2022
Note." Please also clearly state the interest rate and outstanding
principal amount of these
notes. To the extent that $1,610,413 is the amount owed under one of
the Convertible
Notes as of the date of the proxy/registration statement please revise
to provide the
Rajiv Shukla
ALPHA HEALTHCARE ACQUISITION CORP III
March 13, 2023
Page 8
amount owed under the other Convertible Note. We note that the
Convertible Notes are
convertible at the option of the holders into shares of common stock
at a fixed conversion
price equal to the lesser of $0.22 per share and a 25% discount to the
price of the common
stock in a qualified offering which is defined as an offering of
equity and/or debt
securities for gross proceeds to the Company of not less than $10
million. Please revise to
state whether you will interpret this provision to be triggered by the
Business
Combination.
Executive Compensation, page 211
35. Please update this section for Carmell s fiscal year ended December
31, 2022. Refer to
Item 402(a)(4) of Regulation S-K.
Beneficial Ownership, page 218
36. Please revise your disclosure to identify the natural person or
persons who have voting
and/or investment control of the shares held by the 5% or more holders
in the table on
page 219.
Management of the Combined Company
Board Leadership Structure, page 250
37. We note your statement on page 251: As of the closing of the
Business Combination, our
board of directors will consist of six independent members: Rich
Upton, William Newlin,
David Anderson, Steve Bariahtaris, Jaime Garza, MD and Kathryn
Gregory. Our board of
directors undertook a review of the composition of our board of
directors and the
independence of each director. Based upon information requested from
and provided by
each director concerning their background, employment and
affiliations, including family
relationships, our board of directors has determined that Steve
Bariahtaris, Jaime Garza,
MD, Kathryn Gregory and David Anderson qualify as independent as
that term is
defined by Nasdaq Listing Rule 5605(a)(2). Please revise to clarify
whether you will
have six or four independent directors.
Exhibits
38. You appear to be missing Annex C and D. Please revise to include.
39. Please file the Restrictive Covenant Agreement with Hubbell and the
agreement with
Puritan as exhibits pursuant to Item 601(b)(10) of Regulation S-K.
Additionally, we note
FirstName LastNameRajiv Shukla
that many exhibits from the IPO filing were not included, such as, for
example, the
Comapany NameALPHA
Warrant AgreementHEALTHCARE
and RegistrationACQUISITION CORP
Rights Agreement. III revise
to include all of
Please
March these documents
13, 2023 Page 8 as exhibits.
FirstName LastName
Rajiv Shukla
FirstName LastNameRajivACQUISITION
Shukla
ALPHA HEALTHCARE CORP III
Comapany
March NameALPHA HEALTHCARE ACQUISITION CORP III
13, 2023
March9 13, 2023 Page 9
Page
FirstName LastName
General
40. Please quantify the aggregate dollar amount and describe the nature of
what the sponsor
and its affiliates have at risk that depends on completion of a
business combination.
Include the current value of securities held, loans extended and fees
due for which the
sponsor and its affiliates are awaiting reimbursement. Provide similar
disclosure for the
company s officers and directors, if material.
41. Please highlight the risk that the sponsor will benefit from the
completion of a business
combination and may be incentivized to complete an acquisition of a
less favorable target
company or on terms less favorable to shareholders rather than
liquidate.
42. Please clarify if the sponsor and its affiliates can earn a positive
rate of return on their
investment, even if other ALPA shareholders experience a negative rate
of return in the
post-business combination company.
43. Please highlight the material risks to public warrant holders,
including those arising from
differences between private and public warrants. Clarify whether
recent common stock
trading prices exceed the threshold that would allow the company to
redeem public
warrants. Clearly explain the steps, if any, the company will take to
notify all
shareholders, including beneficial owners, regarding when the warrants
become eligible
for redemption.
44. Please expand your disclosure regarding the sponsor s ownership
interest in
Carmell. Disclose the approximate dollar value of the interest based
on the transaction
value compared to the price paid.
45. You renounced your interest in any corporate opportunity in your
amended and restated
certificate of incorporation. Please address this potential conflict
of interest and whether it
impacted your search for an acquisition target.
46. Quantify the value of warrants, based on recent trading prices, that
may be retained by
redeeming stockholders assuming maximum redemptions and identify any
material
resulting risks.
47. Please ensure your disclosure is up to date. As an example, see page
156: We are a blank
check company incorporated on January 21, 2021, as a Delaware
corporation for the
purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase,
reorganization or similar business combination with one or more
businesses. We have not
selected any business combination target and we have not, nor has
anyone on our behalf,
initiated any substantive discussions, directly or indirectly, with
any business combination
target.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Rajiv Shukla
ALPHA HEALTHCARE ACQUISITION CORP III
March 13, 2023
Page 10
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Michael Fay at 202-551-3812 or Al Pavot at 202-551-3738
if you have
questions regarding comments on the financial statements and related matters.
Please contact
Margaret Schwartz at 202-551-7153 or Celeste Murphy at 202-551-3257 with any
other
questions.
Sincerely,
FirstName LastNameRajiv Shukla Division of Corporation Finance
Office of Industrial Applications and
Comapany NameALPHA HEALTHCARE ACQUISITION CORP III
Services
March 13, 2023 Page 10
cc: Laurie Burlingame, Esq.
FirstName LastName