TORYS LLP
- ----------------- 237 Park Avenue Andrew Beck
NEW YORK TORONTO New York, New York Direct Tel. 212.880.6010
10017.3142 abeck@torys.com
TEL 212.880.6000
FAX 212.682.0200
www.torys.com
December 6, 2004
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
U.S.A.
Attention: Ms. Peggy Fisher
RE: OCCULOGIX, INC. REGISTRATION STATEMENT ON FORM S-1, AMENDMENT
NO. 3 COMMISSION FILE NO. 333-118204 FILED ON NOVEMBER 16, 2004
On behalf of our client, OccuLogix, Inc. (the "Company"), we transmit for
your review Amendment No. 4 to the Registration Statement on Form S-1 (the
"Fourth Amended Form S-1") of the Company, which amends Amendment No. 3 to the
Registration Statement on Form S-1 (File No. 333-118204) (the "Amended Form
S-1") of the Company filed on November 16, 2004.
The Fourth Amended Form S-1 reflects changes made in response to the
comment letter received from the Staff of the Securities and Exchange Commission
(the "Commission"), dated November 23, 2004 (the "Comment Letter"). The page
numbers referenced in the responses included in this letter refer to the
enclosed marked EDGAR submission of the Fourth Amended Form S-1. This letter
provides responses and supplemental information in response to the comments of
the Staff and is keyed to the headings and comment numbers contained in the
Comment Letter.
GENERAL
1. WE NOTE YOUR RESPONSE TO COMMENT 4. CONFIRM SUPPLEMENTALLY, IF TRUE, THAT
DR. MACHAT HAS NO EQUITY INTEREST IN TLC OR OCCULOGIX, OR EXPAND TO
DISCLOSE. ALSO DISCLOSE HIS OWNERSHIP INTEREST IN RHEO THERAPEUTICS, INC.
The Company supplementally advises that Dr. Machat has no equity interest
in the Company. The Company has been advised that Dr. Machat owns 25% of
Rheo Therapeutics, Inc. and less than 5% of TLC Vision Corporation. The
Company has revised the disclosure on pages 2 and 46 of the prospectus.
- 2 -
2. WE NOTE YOUR RESPONSE TO COMMENT 5. WE ALSO NOTE THAT DR. MACHAT IS THE
FOUNDER AND SHAREHOLDER OF YOUR PARENT AND HAS INTEREST IN THE SUCCESS OF
YOUR BUSINESS AND THIS OFFERING AS A MAJOR DISTRIBUTOR OF YOUR PRODUCTS AND
TREATMENTS. WE ASSUME YOU WILL TAKE WHATEVER STEPS YOU DEEM APPROPRIATE TO
REDUCE THE LIKELIHOOD THAT THE TIMING OF THIS OFFERING COULD BE ADVERSELY
AFFECTED BY PRESS COVERAGE THAT HAS THE EFFECT OF CONDITIONING THE MARKET
FOR YOUR SECURITIES.
The Company takes the Staff's comment under advisement. The Company has
engaged in discussions with Dr. Machat to reduce the likelihood that the
timing of this offering could be adversely affected by press coverage that
has the effect of conditioning the market for the Company's securities.
USE OF PROCEEDS
3. STATE THE AMOUNT OF THE PROCEEDS THAT WILL BE PAID TO AFFILIATES FOR
INVENTORY PURCHASES AND ANY OTHER USES.
In response to the Staff's comments, the Company has revised the disclosure
in the prospectus on page 25.
LIQUIDITY AND CAPITAL RESOURCES - PAGE 37
- 3 -
4. WE NOTE THAT YOU HAVE MADE COMMITMENTS TO BUY APPROXIMATELY $20.9 MILLION
WORTH OF OCTONOVA PUMPS AND $15.2 MILLION OF RHEOFILTERS, WHILE YOU HAVE
ALLOCATED ONLY UP TO $10.5 MILLION FROM THIS OFFERING TO PURCHASE INVENTORY
OF COMPONENTS. PLEASE ADD A RISK FACTOR DISCUSSING THE EFFECT THESE
COMMITMENTS MAY HAVE ON YOUR LIQUIDITY.
In response to the Staff's comments, the Company has revised the disclosure
in the prospectus on page 12.
PRINCIPAL AND SELLING STOCKHOLDERS - PAGE 83
5. PLEASE DESCRIBE ANY MATERIAL RELATIONSHIP THE SELLING SECURITY HOLDERS HAS
HAD WITH YOU WITHIN THE PAST THREE YEARS. SEE ITEM 507 OF REGULATION S-K.
In response to the Staff's comment, the Company has revised the disclosure
in the prospectus on page 85.
6. PLEASE ADD SEPARATE COLUMNS TO THE TABLE PRESENTING THE AMOUNT TO BE
OFFERED BY EACH SECURITY HOLDER AND THE ADDITIONAL AMOUNT EACH WILL OFFER
IF THE OVERALLOTMENT OPTION IS EXERCISED IN FULL. SEE ITEM 507 OF
REGULATION S-K.
- 4 -
In response to the Staff's comment, the Company has revised the disclosure
in the prospectus on pages 83, 84 and 85.
7. PLEASE DISCLOSE WHETHER ANY OF THE ENTITIES THAT ARE SELLING SHAREHOLDERS
ARE REGISTERED BROKER-DEALERS OR AFFILIATES OF REGISTERED BROKER-DEALERS.
IF ANY OF THE SELLING STOCKHOLDERS ARE BROKER-DEALERS AND THEY ACQUIRED
SHARES OTHERWISE THAN AS COMPENSATION FOR INVESTMENT BANKING SERVICES,
PLEASE NAME THEM AS UNDERWRITERS.
The Company supplementally advises the Staff that based on questionnaires
completed by the selling stockholders, none of the selling stockholders are
registered broker-dealers or affiliates of registered broker-dealers.
- 5 -
8. PLEASE IDENTIFY THE NATURAL PERSON OR PERSONS WHO EXERCISE VOTING AND/OR
DISPOSITIVE POWERS OVER THE SHARES HELD OF RECORD BY EACH LEGAL ENTITY THAT
IS A SELLING STOCKHOLDER.
In response to the Staff's comment, the Company has revised the disclosure
in the prospectus on pages 83, 84 and 85 based on questionnaires completed
by the selling stockholders.
9. PLEASE SUPPLEMENTALLY EXPLAIN WHY ALL OF THE SHAREHOLDERS LISTED HERE SHARE
THE SAME ADDRESS.
In response to the Staff's comment, the Company has revised the disclosure
in the prospectus on page 83 to disclose the addresses for the directors,
officers and 5% stockholders.
UNDERWRITING - PAGE 93
10. WE NOTE THAT THE UNDERWRITERS HAVE RESERVED UP TO FIVE PERCENT OF THE
SHARES FOR SALE DIRECTLY TO YOUR DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
ASSOCIATES. PLEASE SUPPLEMENTALLY ADVISE US HOW YOUR DIRECTED SHARE PROGRAM
WORKS. ALSO, PROVIDE US WITH ANY MATERIALS GIVEN TO POTENTIAL PURCHASERS OF
THE RESERVED SHARES.
- 6 -
At the request of the Company, the underwriters intend to reserve up to 5%
of the Company's common stock being sold in this offering for sale at the
initial public offering price to directors, officers or employees, or
persons who are otherwise associated with the Company through a directed
share program. Citigroup Global Markets Inc. ("Citigroup") will be
administering the directed share program for persons located in the United
States and Hampton Securities will be administering the program for persons
located in Canada. The materials that we are providing to the Staff as
Annex A to this letter represent Citigroup Global Markets Inc.'s form of
directed share program materials that have previously been reviewed by
Kristina S. Wyatt of the Staff.* (*Note: Citigroup has recently added to
the DSP package a "Conflicts Clearance Letter" which is to be completed by
persons identified by the Company as having "business relationships" with
the Company. These persons require approval by their own management in
order to be considered for participation.)
There are approximately 40 people who have been asked to be invited by the
Company in the United States and there are approximately 35 people who have
been asked to be invited in Canada.
- 7 -
The Company and Citigroup Global Markets Inc. believe that this amount
represents an amount which is (1) sufficient to allow the Company to make
available a limited number of shares to such individuals and (2) customary
in transactions of this type.
The Company is distributing the directed share program materials to
potential purchasers together with Preliminary Prospectus. The directed
share program materials will include a Lock-Up Agreement requiring each
purchaser in the program who is not a senior officer or director of the
Company to agree that for a period of 25 days from the date of the
Prospectus, such purchaser will not, without the prior written consent of
Citigroup Global Markets Inc., dispose of or hedge any shares of its common
stock purchased in the directed share program. Officers or directors of the
Company will be subject to the 180 day underwriters lock-up for any shares
purchased through the program.
The Company and Citigroup Global Markets Inc. will work together to operate
the directed share program. The Company alone created the invitation list
and the Company will allocate shares to investors, and Citigroup Global
Markets Inc. will handle the mechanics of distributing the shares.
Citigroup Global Markets Inc. and the Company will employ the following
procedures in making the offering under the directed share program:
- 8 -
o The Company will deliver by first class mail or by Federal Express or
other reputable overnight courier the directed share materials,
including the Preliminary Prospectus, to potential purchasers.
o If the potential investor has an interest in purchasing shares in the
proposed offering, he or she must complete and mail, fax or deliver (a
registered representative of Citigroup Global Markets Inc. will be at
the Company's executive offices on specified dates to accept such
delivery) the Indication of Interest ("IOI") Form, the NASD IPO
Questionnaire (which requests from participants who are not employees
of the Company information needed to comply with the Voluntary
Initiative and NASD Rule 2790), the New Account Information Form (if
the person does not already have an account with Citigroup Global
Markets Inc.), the Form W-9 and the Lock-Up Agreement so that they are
received by Citigroup Global Markets Inc. on a specified date. A
Conflicts Clearance Letter has been requested of all persons
identified as having business relationships with the Company. The
Conflicts Clearance Letter requests that the invited person get
clearance from THEIR management to participate in the offering.
- 9 -
o When the offering is priced, the Company will determine the final
allocation of shares among those persons who submitted timely and
proper indications of interest in participating in the directed share
program. Citigroup Global Markets Inc. will then call each such person
to confirm certain pertinent information, including the purchase
price, the number of shares allocated to such person, the person's
continued desire to participate in the directed share program, the
number of shares within the allocated amount, if any, such person
intends to purchase and the person's account number.
o Citigroup Global Markets Inc. will send each person who, when the
offering was priced, confirmed his or her intention to purchase, a
copy of the Final Prospectus and a written confirmation of the offer
and sale.
o Full payment of the purchase price for the shares bought in the
initial public offering through the directed share program must be
received by Citigroup Global Markets Inc. by the settlement date,
which will be six days after the pricing date and, in accordance with
Rule 15c6-1 under the Securities Exchange Act of 1934, as amended, the
disclosure of such long-dated settlement has been made in the
prospectus. The Company will reallocate any potential purchaser's
shares to other
- 10 -
directed share program participants if Citigroup Global Markets Inc.
does not receive the potential purchaser's payment by the settlement
date. If all of such potential purchasers' shares are not purchased by
other directed share program participants, then Citigroup will notify
the Company of the same and Citigroup will then sell such shares into
the open market.
o The Company also intends to allow participants based in the United
States to participate through a website maintained by Citigroup. The
website is designed with specific encryption to make available to
invited participants electronic versions of the preliminary
prospectus. Participants may also use the website to complete the IPO
Questionnaire, to place an IOI and to confirm whether they want to
purchase any of the shares that the Company may allocate to those
participants who previously submitted an IOI by the IOI deadline.
The directed share program materials that the Company intends to deliver by
first class mail or by Federal Express or other reputable overnight courier
to potential purchasers will include:
o a cover letter to potential purchasers from Citigroup Global Markets
Inc., the administrative agent;
- 11 -
o a General Information and Procedural Memorandum to potential
purchasers, providing instructions and frequently asked questions and
answers;
o an Indication of Interest Form to be completed by potential purchasers
to indicate any interest they may have in purchasing shares in the
proposed initial public offering, including the number of shares they
may have an interest in purchasing;
o an IPO Questionnaire to be completed, signed and returned to Citigroup
Global Markets Inc. by the potential purchaser, which will be used to
help Citigroup Global Markets Inc. determine whether, under the NASD
rules, the potential purchaser is eligible to participate in the
directed share program;
o a New Account Form to be completed by the potential purchaser in order
to allow Citigroup Global Markets Inc. to open an account for the
potential purchaser (a potential purchaser must have a Citigroup
Global Markets Inc. account in order to participate in the directed
share program);
- 12 -
o a Form W-9 to be completed, signed and returned to Citigroup Global
Markets Inc. by the potential purchaser. The Internal Revenue Service
requires this form to be completed in order for the potential
purchaser to provide Citigroup Global Markets Inc. with the potential
purchaser's taxpayer identification and certification;
o a Lock-Up Agreement as described above; and
o a copy of the Preliminary Prospectus.
A form of each of these documents (other than the Preliminary Prospectus)
is provided as Annex B to this letter.
As described in the directed share program materials attached to this
letter, the Company and Citigroup Global Markets Inc. will assure that this
directed share program offer is consistent with Rule 134 by:
- 13 -
o Ensuring that each of the documents (other than the Preliminary
Prospectus) delivered to the persons invited to participate in the
directed share program will contain language that is permitted by Rule
134.
o Requiring each directed share program participant to acknowledge, by
signing the Indication of Interest form, that no offer to buy any of
the shares in the proposed offering can be accepted and no part of the
purchase price can be received by Citigroup Global Markets Inc. until
the Registration Statement covering the proposed offering has been
declared effective by the Commission and that any such offer may be
withdrawn or revoked, without obligation or commitment, at any time
prior to the time that the prospective purchaser's confirmation of his
or her intention to purchase shares if given after the effective date
of the Registration Statement.
o Providing that a potential purchaser's submission of a completed
Indication of Interest form involves no obligation or commitment of
any kind, and by completing the Indication of Interest form, the
person is not binding himself or herself to purchase any shares.
- 14 -
o If the potential purchaser confirms his or her intention to purchase,
the underwriter will send the purchaser a copy of the Final Prospectus
that meets the requirements of Section 10 of the Securities Act of
1933, as amended, which will contain the price of the offering and
other information not included in the Preliminary Prospectus, and a
written confirmation of the sale with respect to the shares.
PRO FORMA TRANSACTIONS - PAGE F-52
11. WE NOTE NUMEROUS REFERENCES TO ALLOCATIONS BASED UPON VALUATIONS PROVIDED
BY AN INDEPENDENT APPRAISER. WHEN YOU MAKE REFERENCE TO AN INDEPENDENT
APPRAISER, YOU MUST SPECIFICALLY IDENTIFY THAT APPRAISER AS AN EXPERT AND
INCLUDE HIS CONSENT IN THE REGISTRATION STATEMENT. REFER TO RULE 436 OF
REGULATION C AND ITEM 601(b) OF REGULATION S-K.
In response to the Staff's comment, the Company has revised the disclosure
in the prospectus on pages 96 and F-57 and will file the consent of the
independent appraiser, Peter Ott & Associates, Inc., with the Fourth
Amended Form S-1.
- 15 -
If you would like to discuss any of our responses to the comments, or if
you would like to discuss any other matters, please telephone the undersigned at
(212) 880-6010 or Adam Armstrong at (416) 865-7336.
Yours truly,
/s/ Andrew J. Beck
Andrew J. Beck
AJB/mt
cc: Elias Vamvakas, OccuLogix, Inc.
David Chaikof, Torys LLP
Marjorie Sybul Adams, Piper Rudnick LLP