GPC Biotech AG, Fraunhoferstr. 20, D-82152 Martinsried
Mr. Jim B. Rosenberg
Senior Assistant Chief Accountant
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W. December 6, 2006
Mail Stop 6010
Washington, DC 20549
Re: GPC Biotech AG
Form 20-F for Fiscal Year Ended December 31, 2005
File No. 0-50825
Dear Mr. Rosenberg:
GPC Biotech AG (the "Company") received comments of the staff of the Securities
and Exchange Commission in a letter, dated August 16, 2006 (the "Comment
Letter") to which the Company responded in a letter dated September 29, 2006
(the "Response Letter"). The Company then received three follow-up questions to
the Response Letter which were conveyed orally by Mark Brunhofer, Senior Staff
Accountant (hereinafter referred to as the "Staff") in a telephone conversation
on November 15, 2006 and are summarized below (the "Questions").
Set forth below are the Company's responses to the Questions. The numbered
paragraphs and headings below correspond to the headings and numbers set forth
in the original Comment Letter and the text set forth in italics below contains
a written summary of the orally conveyed Questions.
Form 20-F for the year ended December 31, 2005
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Operating and Financial Review and Prospects
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Results of Operations and Related Information, page 55
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1. The Staff's first follow-up question related to the Staff's original
comment No. 1, regarding estimates of the costs required to complete each
of the Company's current development projects whose completion is imminent.
As a result of its discussion with the Staff, the Company proposes to revise the
disclosure set forth in the original Response Letter and include the following
disclosure in its report
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on Form 20-F for the fiscal year ended December 31, 2006 and in its future
reports on Form 20-F thereafter:
As of December 31, 2006 we estimate that the costs to complete our ongoing
SPARC (Phase III) registrational trial and to achieve marketing approval
for satraplatin in the indication of second line HRPC will not exceed
(euro)[ ]. This estimate does not take into consideration post-approval
activities, if any, which may be required by the regulatory authorities,
such as Phase IV trials. We are unable to reliably estimate the costs to
complete our other earlier stage drug development projects relating to
satraplatin in indications other than second-line HRPC and for our other
development projects due to uncertainties associated with clinical trials.
Any estimates to complete a research and development project in Phase II
trials, Phase I trials or pre-clinical trials are highly speculative and
may differ materially from expenses ultimately incurred for such projects
because there are many factors outside of our control that could delay or
possibly prevent successful completion of our research and development
projects.
Furthermore, all estimates, including the estimate provided in the previous
paragraph, are forward-looking, subjective and may be subject to change due
to the numerous risks and uncertainties associated with developing
biopharmaceutical products, including but not limited to significant
changes in government regulations, the uncertainty of future preclinical
and clinical study results and uncertainties and the unpredictability
associated with regulatory approvals, product development, manufacturing
and marketing.
Contractual Obligations, page 66
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2. The Staff's second follow-up question related to the Staff's original
comment No. 2 regarding the Company's contingent milestone obligations.
The Company would like to direct the Staff's attention to Footnote 4 in its
Report on Form 6-K reporting its Financial Results for the Third Quarter and
First Nine Months of 2006 and furnished on November 9, 2006, subsequent to the
Response Letter, which contained the following disclosure:
As of September 30, 2006, the Company accrued for two milestone obligations
to a third party whereby an amount of (euro) 4.8 million was charged to
research and development expenses. These contractual obligations become due
upon the acceptance for filing of a New Drug Application (NDA) by the U.S.
Food and Drug Administration (FDA), as well as upon the acceptance for
filing of the first Marketing Authorization Application (MAA) with the
European Medicines Agency (EMEA). Based on the positive results from the
satraplatin Phase 3 registration trial in second-line hormone-refractory
prostate cancer announced during the three months ended September 30, 2006,
the Company deemed both milestone events to be probable.
The Company accrued for the milestones and included this disclosure after
receiving (and publicly announcing) positive topline results for its SPARC
(satraplatin Phase III registrational) trial.
In its future reports on Form 20-F, the Company intends to revise the
contractual obligations table to include these amounts in the aggregate.
Note 5: Acquisition of Significant Assets, page F-15
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5. As the third follow-up question to original comment No. 5 in the Comment
Letter relating to the accounting for the acquisition of the cash as a
financing activity instead of an investing activity, the Staff asked to
clarify whether the shell company
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would have raised the (euro)10.7 million of equity contributions
irrespective of the subsequent acquisition by it of substantially all of
the assets of Axxima (and the shell company's own subsequent acquisition by
the Company) and whether the Company would have acquired the shell company
without it being funded with (euro)10.7 million of equity.
The Company advises the Staff that the transactions were factually conditioned
on each other and neither would have occurred without the other. Also, the Asset
Purchase Agreement between Blitz 05-001 GmbH (herein generally referred to as
the "shell company") and Axxima's Insolvency Receiver contains a condition
precedent in Section 13 that the Supervisory Board of the Company consents to
the transaction. This consent of the Supervisory Board approved the capital
increase of the Company and the issuance of shares of Common Stock to the
various private equity investors who funded the aforementioned capital
contribution to the shell company.
The Company intends to clarify this point in its future filings on Form 20-F by
inserting the following disclosure:
The cash infusion of the investors for the benefit of the holding company
was conditioned on the subsequent acquisition of such holding company by us
and vice versa.
********
In responding to the Staff's comments, please be advised that the Company hereby
acknowledges that:
o the Company is responsible for the adequacy and accuracy of the disclosures
in the filing;
o Staff comments or changes to disclosures in response to Staff comments do
not foreclose the Commission from taking any action under federal
securities law of the United States; and
o the Company may not assert the Staff's comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
If you or another member of the Staff has any further questions or comments
concerning these responses or if you require additional information, please feel
free to contact Mirko Scherer, Senior Vice President and Chief Financial Officer
at +49 (89) 85652600 or Kristina Beirne, Assistant General Counsel, (609)
524-1028.
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Very truly yours,
The Management Board of GPC Biotech AG
represented by:
/s/ Mirko Scherer
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Name: Dr. Mirko Scherer
Title: Chief Financial Officer
/s/ Elmar Maier
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Name: Dr. Elmar Maier
Title: Senior Vice President
Business Development
cc: Mark Brunhofer, Senior Staff Accountant
Brent Hatzis-Schoch, Vice President and General Counsel
Danielle Carbone, Shearman & Sterling LLP
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