April
20,
2007
VIA
FEDERAL EXPRESS AND EDGAR
United
States Securities and Exchange Commission
Office
of
Emerging Growth Companies
100
F
Street, NE - Mail Stop 3561
Washington,
D.C. 20549
Attn: Mr.
Duc
Dang
|
Re:
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Healthcare
Acquisition Corp.
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|
|
Preliminary
Proxy Statement
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Filed
on February 9, 2007
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File
No. 1-32587
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Ladies
and Gentlemen:
On
behalf
of Healthcare Acquisition Corp. (the “Company”
or
“HAQ”), we are electronically transmitting hereunder of Amendment No. 1
(“Amendment
No. 1”)
to the
Preliminary Proxy Statement filed with the Securities and Exchange Commission
(the “Commission”) on February 9, 2007 (the “Proxy
Statement”)
together with this letter which responds to the Staff’s comments to the
Preliminary Proxy Statement set forth in a letter from John Reynolds, Assistant
Director dated March 20, 2007, addressed to John Pappajohn, Chairman of
the
Board.
We
are
authorized by the Company to provide the response contained in this letter
on
behalf of the Company. In this letter, we have recited the comments from
the
Staff in bold and have followed each comment with the Company’s response. Please
note that the entire filing has been modified and updated to reflect the
inclusion of financial statements for each of Healthcare Acquisition and
PharmAthene, Inc. at December 31, 2006. Marked courtesy copies of
this filing are being sent via overnight courier to Messrs. John Reynolds,
Duc
Dang and David Link.
General
| 1. |
We
note
the
disclosure in the first risk factor on page 38 that your board
did not
determine a specific value for the target. Please revise your
letter and
notice to stockholders and summary section to highlight this
fact.
Further, in the appropriate section, please revise to clarify
how such
conduct is consistent with the disclosure in your IPO prospectus.
Clarify
how the board determined the merger to be fair, without determining
the
value of the target.
|
We
have
revised the letter and notice to stockholders and summary section to clarify
that the aggregate consideration being paid to the PharmAthene stockholders
and
noteholders is reflective of the price determined by the Board of Directors
as
the value of PharmAthene. We have revised the Preliminary Proxy Statement
to
clarify how such conduct is consistent with the disclosure in our IPO
prospectus. Further, we have substantially modified and enhanced the Background
of the Merger discussion and related topics at pages 51 through 59 to disclose
the analytical bases for the Board’s reasons for the Merger with PharmAthene. We
have cross referenced their discussions in the letter and notice to
stockholders.
| 2. |
We
note the boldfaced disclosure in the forepart that shareholders
must
present their physical stock certificate on the business day
prior to the
date of the special meeting. On page 48, you disclose that shareholders
“will only be entitled to receive cash for these shares if you
continue to
hold these shares through the closing date of the merger and
then tender”
the certificate to you. The noted disclosures are not consistent.
Please
revise to reconcile your disclosure.
|
We
have
revised this discussion to reflect that the shareholders who demand their
portion of the trust fund have until 5:00 p.m. on the business day following
closing of the merger to deliver their share certificates to the transfer
agent.
This modification removes, we believe, any confusion regarding the physical
possession of the share certificates and voting rights (even though record
holders as of the record date would retain all voting rights absent an
agreement
with a transferee otherwise). Please see page 46.
| 3. |
We
note the disclosure that tendering of the physical stock certificate,
please revise to clarify how shareholders will vote such shares
in the
special meeting if they no longer hold such shares, in street
name or
otherwise.
|
Holders
of record as of a record date are accorded voting rights under general
corporate
law (absent some agreement by the record holder to sell or transfer his
voting
rights) and physical possession of a share certificate is not required.
However,
as we have modified the discussion of the surrender of share certificates
as
outlined under our response to Comment 2 above, we believe that this issue
has
been resolved.
| 4. |
In
connection with comment two, please revise to disclose the
rationale for
requiring the tendering before the meeting when the conversion
is
predicated on the merger getting approved, which may not occur.
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We
have
revised the Preliminary Proxy Statement to reconcile our disclosure and,
therefore, we believe that this Comment is no longer applicable. Please see
our response to Comment 2 above.
2
| 5. |
In
connection with comment two, please revise in appropriate locations
to
clearly disclose the minimum amount of time that will be provided
to
shareholders to tender their shares for the conversion rights.
Clarify if
shareholders who tender their shares are still entitled to attend
the
meeting.
|
We
have
revised the Preliminary Proxy Statement in appropriate locations to clearly
disclose that shareholders will hold their shares until after closing of
the
Merger before they are required to tender their shares for the conversion
rights. Please see page 48.
| 6. |
In
your disclosure discussing the conversion of shares, please revise
to
provide a step by step procedure, including the timing of the
tendering of
shares.
|
We
have
revised the Preliminary Proxy Statement to provide a step by step procedure,
including the timing of the tendering of shares for each conversion. Please
see
page 48.
| 7. |
In
the appropriate sections, please revise to clearly discuss
the costs
associated with obtaining physical possession of the stock
certificates by
shareholders who hold their shares in street name. If possible,
in the
appropriate section, please revise to disclose the percentage
of your
shares that are held in street name.
|
We
have
revised the Preliminary Proxy Statement to disclose that there may be costs
associated with obtaining physical possession of the stock certificates
by
shareholders who hold their shares in street name. Based upon the Company’s
discussion with its transfer agent and with general discussions with broker
dealer firms, the costs are assessed by the broker dealer firm (or its
clearing
agent) and differ from firm to firm. Therefore, we cannot include a
definitive cost in the discussion. Please see pages 5 and 48.
We
have
also included disclosure regarding the percentage of our common stock held
in street name.
Proxy
Card
| 8. |
Please
revise to highlight the entire sentence which indicates “If no direction
is made, this proxy will be voted “FOR” Proposals 1, 2 and 3”.
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We
have
revised the Proxy Card to highlight the entire sentence which indicates
“If no
direction is made, this proxy will be voted “FOR” Proposals 1, 2, and 3. Please
see the Proxy Card.
Notice
of Special Meeting of Stockholders
| 9. |
In
the second paragraph after the caption “your vote is important” we note
the disclosure that you will not have sufficient time or resources
to find
another target should this one fail. We also note the disclosure
here and
elsewhere that you will commence the winding up, dissolution
and
liquidation “in accordance with the terms” of your certificate of
incorporation and the trust agreement. Instead, please revise
to disclose
the actual amount of time you will wait after a failure to
approve the
merger has taken place to initiate the winding up, dissolution
and
liquidation of your company.
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3
We
have
revised the Preliminary Proxy Statement to disclose the actual amount of
time
that the Company will wait after a failure to approve the merger has taken
place
to initiate the winding up, dissolution and liquidation of the Company.
The
Company believes that it will be able to commence the dissolution process
within
5 business days of the vote, assuming the merger is not approved and has
included such disclosure. Please see the Notice of Special Meeting of
Stockholders.
| 10. |
Also
here and in the appropriate section, please revise to clarify
what actions
you will take if a vote for dissolution is rejected.
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We
have
revised the Preliminary Proxy Statement to clarify that the Company will
continue to seek approval of dissolution if a vote for dissolution is rejected,
but that there can be no assurance that such approval would ever be obtained.
Please see the Notice of Special Meeting of Stockholders and pages 41-43,
63 and
122.
Summary
of the Material Terms of the Merger, page 1
| 11. |
Please
revise to disclose the exchange ratio of your securities to those
of the
target.
|
We
have
revised the Preliminary Proxy Statement to disclose the exchange ratio
of the
securities to those of the target. Please see pages 66-67. We also included
the
disclosure under the section regarding the terms of the merger at page
1.
Questions
and Answers, page 2
| 12. |
In
question and answer 15 on page 5, we note that a “portion of the proceeds”
will be used to “finance the merger”. Please revise to clarify if that
means cash will be used as consideration for the merger or if
it
is
just being used to
pay expenses.
|
We
have
revised the disclosure to clarify how the merger consideration is being
paid and
how expenses and conversion of shares are being paid. As disclosed in numerous
sections of the Preliminary Proxy Statement, the actual merger consideration
includes no cash other than the milestone payments, which are
contingent and deferred underwriter costs, expenses related to the
transaction and possible conversion of trust funds for shareholders so
electing;
substantially all of the amounts held in the trust fund, assuming the
merger is completed, will be used for working capital of the post merger
company. Please see page 9.
| 13. |
We
note the disclosure at the bottom of page five that you did not
obtain a
valuation or fairness opinion. Please revise to include a question
and
answer to clarify the value that your officers and directors
assigned to
the target and not just the fact that it exceeds 80% of your
net assets.
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4
We
have
revised the disclosure to include a question and answer to clarify that
the
value that the management of the Company assigned to the target is based
upon
the purchase price as negotiated by the parties and not just the fact that
it
exceeds 80% of the net assets. As stated elsewhere in this letter, we have
significantly modified the discussion of the Merger and submit that we
have
included disclosure which provides stockholders with a full discussion
of the
reasons for the Merger and valuation analysis of the Board. Please see
pages 7
and 60-61.
| 14. |
We
note the inclusion of the public warrants to determine the
36.7% amount of
aggregate ownership by PharmAthene security holders. Since
you have
included the public warrants, please disclose the ownership
percentages
taking into account the possible conversion of the convertible
notes.
|
We
have
revised the Preliminary Proxy Statement to disclose the ownership percentages
taking into account the possible conversion of the convertible notes. Please
see
the revised table on page 7.
| 15. |
Please
revise to quantify the amount of cash that will be issued in
lieu of
fractional shares when answering the second question on page
six.
|
Please
note that PharmAthene has 23 shareholders. Therefore, at most the Company
would
issue 23 fractional shares. Based upon the value at $8 per share, we do
not
believe this is amount is material and have disclosed that the amount of
cash that may be issued in lieu of fractional shares is immaterial. Please
see
page 68.
| 16. |
In
answering question 25, please revise to break down the post merger
management group to highlight who is currently associated with
you and
with the target.
|
We
have
revised the disclosure in response to this question to breakdown the post
merger
management group to highlight who is currently associated with the Company
and
with the target on page 9.
| 17. |
In
response to question 26, please revise the answer to quantify
your current
outstanding liabilities and indicate the amount of those that
are covered
and not covered by waivers.
|
We
have
revised the Preliminary Proxy Statement to quantify the Company’s current
outstanding liabilities and have indicated the amount of those that are
covered
and not covered by waivers on page 9.
Summary
of the Proxy Statement, page 9
| 18. |
We
note your statement that HAQ was formed to acquire “a business whose net
assets are at least 80% of the net assets of HAQ.” Your Form S-l stated
that the business combination must be for assets or with a target
business
whose fair market value is at least equal to 80% of our net assets
at the
time of such acquisition. Please revise as appropriate.
|
5
We
have
revised the Preliminary Proxy Statement to reconcile the disclosure set
forth
in HAQ's S-1and the Preliminary Proxy Statement. Please see pages 4, 61,
119 and 120.
| 19. |
Please
revise to define your use of the term “commercial stage” on page nine.
|
We
have
revised the Preliminary Proxy Statement to eliminate the use of the term
“commercial stage” on page 11.
| 20. |
Please
revise to clarify here that PharmAthene has included losses since
inception, if true.
|
We
have
revised the Preliminary Proxy Statement to clarify that PharmAthene has
incurred
losses since inception on page 11.
| 21. |
Based
on the disclosure on page 10 about the possible upward adjustment
due to
conversions, please revise to disclose the maximum possible upward
adjustment so that investors can understand the full possible
extent of
the dilution they could
experience.
|
We
have
revised the Preliminary Proxy Statement to disclose the maximum possible
upward
adjustment. Please see page 12.
| 22. |
On
page 10, we note that the preferred securities of the target
will be
terminated. Please revise to clarify if the holders of such securities
will receive anything in exchange due to the
terminations.
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In
response to the Staff’s Comment 11, we have included the ratio of exchange for
each class of PharmAthene security. This information is set forth in detail
on
pages 1 and 67.
| 23. |
We
note the disclosure on page 12 that holders of PharmAthene common
stock
may be entitled to dissenter’s or appraisal rights, however 80% of the
outstanding common stock has voted in favor of the merger. In
the
appropriate section, please revise to clarify if PharmAthene’ security
holders have dissenter's or appraisal rights. Also, in the appropriate
section, please revise to clarify if the PharmAthene security
holders
voted or consented to the merger. Did the target hold a stockholders’
meeting?
|
We
have
revised the Preliminary Proxy Statement to include a discussion that the
PharmAthene security holders have dissenters’ or appraisal rights. We have
revised to clarify that all of the PharmAthene security holders who consented
to
the merger did so by written consent. Please see pages 14, 15 and
49.
6
| 24. |
In
disclosing the interest of your directors and officers in the
merger
throughout this document, please revise to quantify the financial
interest
they have in this transaction. Quantify the total price they
paid for
their shares and the market price of such shares. Also, disclose
the total
warrants purchased and the paid and current price of such warrants.
If
there are any arrangements contemplated for your initial shareholders
to
act as consultants or any other role, please disclose also.
|
We
have
revised the Preliminary Proxy Statement to quantify the financial interest
that
the Company’s directors and officers have in this transaction. We have
quantified the total price that such individuals paid for their shares
and the
market price of such shares. We have also disclosed the total warrants
purchased
and the paid and current price of such warrants. Please see
page 18.
This
will
confirm that there are no arrangements with the Company’s initial shareholders
to act as consultants or any other role.
| 25. |
We
note that the beneficial ownership table on page 13 does not
include
common stock issuable upon the exercise of warrants when the
warrants are
exercisable upon the consummation of the business combination.
Advise us
of the legal basis why the warrants are not included in the beneficial
ownership table.
|
We
have
revised the Preliminary Proxy Statement to include the common stock issuable
upon the exercise of warrants. Please see pages 15, 49, 138 and
139 .
| 26. |
Please
revise to indicate the control persons for Sapling, LLC and Fir
Tree
Recovery Master Fund, LP.
|
We
have
revised the Preliminary Proxy Statement to indicate the control persons
for
Sapling, LLC and the Fir Tree Recovery Master Fund, LP. Please see pages
15, 49,
138 and 139.
| 27. |
Please
fill in the table at the top of page 15.
|
We
have
revised the table at the top of page 15.
| 28. |
Please
revise to fill in the percentage blanks under the caption “interest of
PharmAthene directors and officers in the merger” on page 15.
|
We
have
revised the Preliminary Proxy Statement to fill in the percentage blanks
under
the caption “interest of PharmAthene directors and officers in the
merger”. Please see page 18.
7
Selected
Historical Financial Information, page 19
| 29. |
Revise
your table of operating results included at page 19 to indicate
PharmAthene’s results for the nine months ended September 30, 2006 are
unaudited.
|
We
have
revised the operating results for PharmAthene to reflect fiscal year results
which are audited and, as such, the reference is no longer
necessary.
Market
Price Information, page 23
| 30. |
On
this page, please revise to highlight the current market price
and how it
compares to the conversion price.
|
We
have
revised the Preliminary Proxy Statement to highlight the current market
price
and how it compares to the estimated conversion price. Please see page
26.
Risk
Factors. page 24
| 31. |
As
they are currently written, your risk factor subheadings only
highlight
facts and not the risks associated with the materialization of
the facts.
Please revise your subheadings to highlight the risk and harm
to be
suffered should the disclosed facts materialize.
|
We
have
revised the risk factor subheadings to highlight each risk and the harm
to be
suffered should the disclosed facts materialize.
| 32. |
Please
revise risk factor two to briefly discuss the risk you are attempting
to
convey and include more detailed disclosure later in the document
if
material.
|
We
have
revised risk factor two to briefly discuss the risk we are attempting to
convey.
Please find on page 28.
| 33. |
Risk
factors six and seven appear to address the same risk. Please
revise to
clarify how they
are separate risks.
|
We
have
combined risk factors six and seven as the risks described overlapped.
Please
see page 29.
| 34. |
Risk
factor five addressing the expensive and uncertain development
process
appears very similar to risk factor nine addressing delays in
clinical
trials and development cost. Please revise to clarify how they
are
separate risks.
|
We
have
combined portions of risk factor nine with five as the risks described
in each
overlapped. Please see page 29.
8
| 35. |
Risk
factor 15 the risk associated with retention of personnel, appears
to be a
risk that affects companies in and outside of your industry.
Please revise
to clarify how the risk is specific to you.
|
We
agree
with the Staff’s position that the risk noted in the Comment is generic
affecting companies inside and outside of this industry and that such risk
is
not particular to PharmAthene. As such, the risk factor has been
deleted.
| 36. |
Risk
factor 16, the risk associated with “managing growth” is a risk that
affects companies in and outside of your industry. In addition
the risk
factor appears generic. Please revise to clarify how the risk
is specific
to you.
|
We
agree
with the Staff’s position that the risk noted in the Comment is generic
affecting companies inside and outside of this industry and that such risk
is
not particular to PharmAthene. As such, the risk factor has been
deleted.
| 37. |
In
risk
factor
17, please revise to disclose the number of patents you rely
upon and the
ownership of such patents.
|
In
risk
factor 17 we have revised the disclosure to set forth the number of U.S.
patents
and patent applications on which PharmAthene relies and the ownership of
such
patents. Please see page 17.
| 38. |
Your
risk factors 17 and 19 appear to address similar risks. Please
revise to
combine the relevant portions of these factors into a single
risk factor.
|
We
have
revised the risk factors noted to combine the relevant portions of these
risk
factors into a single risk factor. Please see page 17.
| 39. |
The
risk
factors
need to be set forth in the order of materiality. In this regard,
you must
more prominently disclose that there was no independent valuation
of
PharmAthene undertaken in connection with the
Merger.
|
With
due
respect to the Staff, based upon established practice adopted by the securities
bar, we do not believe it to be appropriate to equate the placement of
risks in
any particular order with materiality. We note that the Commission long
ago
advised issuers, that they should eliminate numbering of risk factors in
order
to address this concern. However, we note that Item 503(c) of Regulation
S-K
does require that risk factors be logically organized and have determined
to re
order several of the risk factors, including the risk factor stating that
there
was no independent valuation of PharmAthene undertaken in connection with
the
Merger. Please see page 37.
| 40. |
In
the
risk factor on page 39, please revise to quantify the total amount
of
liabilities outstanding. Also identify the entities which have
not waived
their rights, interests or claims to the funds held in the trust
account.
|
9
We
have
revised the risk factor noted to quantify the total amount of liabilities
outstanding and to identify the entities which have not waived their rights,
interests or claims to the funds held in the trust account. Please see page
40.
The
HAQ Special Meeting of Stockholders, page 45
| 41. |
We
note your statement that “the HAQ Board of Directors...has determined that
the consideration to be paid by HAQ in connection with the Merger
is
fair…from a financial point of view and the fair market value of
PharmAthene is equal to or greater than 80% of the value of the
net assets
of HAQ.” We also note your statement that HAQ did not determine a specific
valuation of PharmAthene at the time it entered into the merger
agreement.
Revise to specifically address how the Board of Director of HAQ
determined
that the consideration was fair from a financial point of view
when it did
not determine a specific valuation of PharmAthene when it entered
into the
merger agreement. We may have further comment.
|
We
have
revised this discussion in light of the Staff’s comments. Specifically, we have
modified the discussion to reflect that the Company’s management determined that
the price negotiated by the parties, on an arm’s length basis, reflected the
value of PharmAthene. We have revised the Preliminary Proxy Statement to
specifically address how the Board of Directors of HAQ determined that
the
consideration was fair from a financial point of view based upon its negotiation
of the purchase price of PharmAthene when it determined to enter into the
Merger
Agreement. Further, the revised discussion of the Background of the Merger
and
HAQ’s Reasons for the Merger and Recommendation of the HAQ Board appearing
at
pages 51 through 59, have been significantly expanded to describe the
valuation process and considerations of the Board of Directors of HAQ.
Solicitation
Costs, page 48
| 42. |
We
note that directors and officers of Healthcare Acquisition may
call or
personally solicit proxies from the stockholders. You must file
any
scripts, outlines, instructions or other written materials you
will
furnish to individuals soliciting proxies. You must also file
materials
furnished to assist in the answering of stockholder inquiries.
Refer to
Rule 14a-6(c) of Regulation
14A.
|
The
Company is aware of its obligations and confirms its understanding of these
requirements. Please note the Company has previously filed a Form 8-K dated
January 23, 2007 which included presentations to be made to
shareholders.
The
Merger Proposal, page 50
| 43. |
Briefly
indicate the amount of additional shares which may be issued
if the
maximum numbers of shareholders exercise their conversion rights.
|
10
We
have
revised the Preliminary Proxy Statement to indicate the amount of additional
shares of HAQ common stock which may be issued if the maximum numbers of
shareholders of HAQ exercise their conversion rights. Please see page 51.
Background
of the Merger. page 50
| 44. |
Please
revise to address the criteria used in your search for target
companies.
|
We
have
revised the discussion regarding the Background of the Merger to address
the
criteria used by the Company in its search for target companies. Please
see
pages 51 through 59.
| 45. |
Please
indicate the time frame of your discussions with the 10 potential
target
companies. Revise to provide a detailed time line concerning
Healthcare's
contacts with prospective targets.
|
We
have
revised the Preliminary Proxy Statement to include a brief discussion of
a time
line concerning the Company’s contacts with prospective targets. Please see
pages 52 through 54.
| 46. |
Please
revise to address in more detail the negotiations with the target
that
resulted in a signed letter of intent. Briefly describe the business
conducted by the target that signed the letter of intent. Address
the
reasons why an agreement with that target was not reached.
|
We
have
revised the discussion relating to the Background of the Merger to
include some additional disclosure with respect to the negotiations with
a
previous target that resulted in a signed letter of intent. We have also
described the business conducted by that target and provided a brief discussion
of the reasons why an agreement with that target was not reached.
Please see pages 54 through 59.
| 47. |
Briefly
describe the business conducted by SIGA Acquisition
Corp.
|
We
note
the Staff’s comment and we have modified our disclosure in certain limited
respects to address the Staff’s comment. We
have
briefly described the business conducted by SIGA and SIGA Acquisition Corp.
SIGA
Acquisition Corp. had no operations and was only created to serve as a
merger
vehicle. Please see page 54.
11
| 48. |
Revise
to address the reasons why the merger agreement was terminated
by SIGA
Acquisition Corp.
|
We
have
revised the discussion to indicate that we are not aware of SIGA’s reasons
for terminating the proposed transaction as this information was not provided
in
its notice of termination. SIGA had the right to terminate the merger agreement
if the merger had not been consummated by September 30, 2006 which had
passed at
the time that SIGA sent its notice of termination. Please see page 54.
| 49. |
Please
revise to disclose the purchase price Siga was going to pay for
PharmAthene and compare it to the consideration to be offered
in this
transaction.
|
With
all
due respect to the Staff, we do not believe that this discussion is proper.
Staff’s comment suggests a comparison of two separate transactions between
unaffiliated parties which we believe could be misleading. In our substantially
modified and expanded discussions regarding the Merger terms and the basis
and
reasons for HAQ’s Board to recommend the transaction, we have included a
statement that the terms of the SIGA transaction were only a minor consideration
by the Board of Directors. We do not believe that shareholders of HAQ should
be
comparing “prices” between two totally different transactions and we submit that
our disclosures, as revised, should be considered responsive regarding
the
merger discussions.
| 50. |
We
note that counsel to PharmAthene serves as counsel to a company
on which
John Pappajohn and Derace Schaffer, MD serve as directors and
of which
Wayne Schellhammer is President and CEO. Please revise to clarify
whether
there were any discussions between counsel to PharmAthene and
John
Pappajohn, Derace Schaffer or Wayne Schellhammer prior to October
5, 2006
concerning the acquisition of PharmAthene by
Healthcare
Acquisition.
|
We
have
revised the discussion in the Background of the Merger section to clarify
that
there were no discussions between counsel to PharmAthene and John Pappajohn,
Derace Schaffer or Wayne Schellhammer prior to October 5, 2006 concerning
a
possible transaction between PharmAthene and HAQ. Please see page 54.
| 51. |
Describe,
in greater detail, discussions during the period between October
5, 2006
and January 16, 2007. Discuss each meeting in detail. Describe
the
substance of all material discussions.
|
We
have
substantially revised the Background of the Merger section and have revised
and
described in detail our discussions during the period between October 5,
2006
and January 16, 2007. Each meeting is specified and the substance of all
material discussions is set forth. Please see pages 51 through 59.
| 52. |
In
this section, please revise to highlight the 18 month deadline
by which
you were required to at least locate a
target.
|
12
We
have
revised the discussion in the Background of the Merger section to highlight
the
18 month deadline by which we were required to at least locate a target.
Please
see page 52.
| 53. |
Discuss
the negotiations of the merger in greater detail. Clarify how
the final
consideration was determined. Discuss whether any valuation of
PharmAthene
was conducted prior to or during the merger negotiations. Indicate
whether
any valuation of PharmAthene was presented to the Healthcare
board of
directors prior to their approval of the merger on January 16,
2007.
Discuss whether and/or how The Maxim Group participated in determining
the
consideration to be paid to
PharmAthene.
|
We
have
revised the discussion of the negotiations of the merger in greater detail
and
to clarify how the final consideration was determined. We have revised
the
disclosure to discuss whether any valuation of PharmAthene was conducted
prior
to or during the merger negotiations. We have revised the disclosure and
indicated whether any valuation of PharmAthene was presented to the HAQ
Board of Directors prior to their approval of the merger on January 16,
2007. We
have also disclosed that The Maxim Group was not retained to provide, and
did
not provide, any written or formal analysis in determining the consideration
to
be paid to the PharmAthene security holders. However, the involvement of
The
Maxim group is detailed throughout the discussion. Please see pages 51
through 59.
| 54. |
Please
clarify when The Maxim Group was retained to assist on the merger
transaction. Indicate the services performed by The Maxim Group
in
connection with the merger negotiations.
|
We
have
revised the discussion in the Background of the Merger section to specify
when The Maxim Group was retained to assist HAQ and to indicate services
performed by The Maxim Group in connection with the merger negotiations.
Please
see page 55
| 55. |
Any
presentations or reports prepared by management or The Maxim
Group prior
to the board's determination on January 16, 2007 to approve the
merger,
should be described in reasonable detail, by date, indicating
the nature
of the presentation, information presented, recommendations and
conclusions. Any materials, including reports, analyses, projections,
talking papers and similar items which were prepared or presented
at the
board meetings should be supplementally provided to the
staff.
The disclosure should not be conclusory and should provide sufficient
information so that the investors may determine whether the proposed
merger is in their best
interests.
|
We
have
revised the disclosure to indicate that there were no presentations or
reports
prepared by The Maxim Group prior to the Board's determination on January
16,
2007 to approve the merger. Also, our entire discussion of the merger approval
process has been modified in light of the Staff’s Comments 52, 55 and
56.
13
| 56. |
Please
indicate when the Board of Directors of HAQ met regarding the
merger
negotiations and merger transaction. Address the HAQ’s Board of Directors
meetings in detail.
|
We
have
substantially revised the discussion in the Background of the Merger section
to
indicate when the Board of Directors of the Company met regarding the merger
negotiations and merger transaction and also to address the Company’s Board of
Directors meeting in detail. Please see pages 51 through 59.
| 57. |
Specifically
address whether any due diligence package regarding PharmAthene
was
presented to the board of directors on or prior to January 16,
2007.
Address the information presented regarding PharmAthene in reasonable
detail.
|
We
have
revised the disclosure to include information regarding PharmAthene due
diligence which was presented to the Board of Directors on or prior to
January
16, 2007 and to include information presented regarding PharmAthene in
reasonable detail. Please see page 55.
| 58. |
Please
identify the “outside consultant” who met with David Wright on December 19
and 20, 2006. Briefly address the consultant's
expertise.
|
We
have
revised the discussion in the Background of the Merger section to identify
the
“outside consultant” who met with David Wright on December 19 and 20, 2006 and
to briefly describe the consultant’s expertise. Please see page 57.
| 59. |
We
note your statement that the financial background and experience
of
members of the board of directors makes it qualified to determine
whether
the merger meets the 80% test. Please revise to provide a separate
section
addressing the board’s and management's experience in performing financial
analyses, due diligence and their qualifications in valuing companies
or
advise us why the disclosure is not necessary.
|
We
have
revised the Preliminary Proxy Statement to provide a separate section addressing
the Board’s and management’s experience in performing financial analyses, due
diligence and their qualifications in valuing companies. Further, the
biographies of our officers and directors provide further support of their
abilities to assess a merger candidate. Please see page 62.
| 60. |
Following
subsection discussing your reasons for the merger, please revise
to
thoroughly discuss the analysis made by your board in deciding
to approve
and recommend that shareholders vote for the merger. Specifically
address
the financial analysis performed by
the
Board of Directors in evaluating and approving the acquisition.
We may
have further comment.
|
14
We
have
substantially revised the Preliminary Proxy Statement to thoroughly discuss
the
analysis made by our Board in determining to approve and recommend that
shareholders vote for the merger. We have specifically addressed the financial
analysis performed by the Board of Directors in evaluating and approving
the
acquisition. Please see pages 59 to 61.
HAQ’s
Reasons for the Merger and Recommendation of the HAQ Board, page 54
| 61. |
Please
revise to substantiate the basis for the disclosure that PharmAthene
is a
“leading company in the biodefense
industry.”
|
We
have
revised the noted disclosure to provide support for the statement that
PharmAthene is a “leading company in the biodefense industry.” Please see page
60.
| 62. |
Please
revise to elaborate on PharmAthene’s “strong
presence.”
|
We
have
revised the noted disclosure to elaborate on PharmAthene’s “strong presence” and
provide a basis for that characterization. Please see page 60.
| 63. |
Please
revise to elaborate on the “many successful drug launches” that David
Wright was involved with.
|
We
have
revised the noted disclosure to identify some of the “many successful drug
launches” that David Wright has been involved with. Please see page
61.
| 64. |
Please
revise to quantify the “awarded U.S. government
contracts.”
|
We
have
revised the noted disclosure to quantify the “awarded U.S. government contract.”
Please see page 61.
| 65. |
Discuss
the aspect of PharmAthene’s financial results that you considered in
determining to recommend shareholders vote for this
transaction.
|
We
have
revised the discussion regarding HAQ’s Reasons for the Merger to discuss the
aspect of PharmAthene’s financial results that the Company considered in
determining to recommend that shareholders vote for this transaction. Please
see
pages 60 to 61.
| 66. |
Elaborate
on the business strategy that you considered in determining to
recommend
shareholders vote for this
transaction.
|
We
have
revised the discussion regarding HAQ’s Reasons for the Merger to elaborate on
the business strategy that the Company considered in determining to recommend
that shareholders vote for this transaction. Please see page 64.
15
| 67. |
Please
revise to elaborate on the “valuation of comparable companies” that you
engaged in to recommend shareholders vote for this
transaction.
|
We
have
revised the discussion regarding HAQ’s Reasons for the Merger to elaborate on
the “valuation of comparable companies” that the Company engaged in to recommend
that shareholders vote for this transaction. Please see page 61.
| 68. |
The
recommendation of the board of directors should be substantially
revised
and expanded to provide a reasonably detailed discussion of the
basis for
the recommendation and a detailed analysis of the factors considered
and
conclusions reached. In addition, the discussion should provide
an
analyses and conclusions about each factor, and indicate whether
the
factor was favorable, unfavorable or neutral to the board's
conclusion.
|
We
have
substantially revised and expanded the section regarding HAQ’s Reasons for the
Merger to provide a reasonably detailed discussion of the basis for the
recommendation and a detailed analysis of the factors considered and conclusions
reached, and indicated whether each factor considered was favorable or
unfavorable to the Board’s conclusion. Please see pages 64 and 65.
| 69. |
To
strike a more balanced presentation, include a summary of the
possible
disadvantages of the merger considered by the board of
directors.
|
We
have
revised the section regarding HAQ’s Reasons for the Merger to include a summary
of the possible disadvantages of the merger considered by the Board of
Directors. Please see pages 64 to 65.
The
Agreement and Plan of Merger, page 57
| 70. |
We
note the disclosure of the "average exercise price" on page 57.
Please
revise to discuss the actual exercise prices of the options and
warrants
to be granted as part of this
merger.
|
We
have
revised the discussion regarding the Agreement and Plan of Merger to describe
the actual exercise prices of the options and warrants to be granted as
part of
this merger. Please see page 67.
| 71. |
Considering
the number of common and preferred stock of the target is already
determined, please revise to disclose the exchange
ratios.
|
We
have
revised the discussion regarding the Agreement and Plan of Merger to disclose
the exchange ratios. Please see page 67.
| 72. |
On
page 59, we note that the notes’ 8% interest will accrue and be payable
upon repayment of the note. Please revise to clarify then if
the interest
compounds or if the accrual is in simple interest and the interest
only
takes account of the principal
amount.
|
16
We
have
revised the discussion in this section to clarify that the interest that
accrues
is simple interest on the principal amount. Please see page 68.
| 73. |
Please
revise to disclose the maturity date of the 8% convertible
notes.
|
We
have
revised the discussion in this section to disclose the maturity date of
the 8%
convertible notes. Please see page 68.
Management's
Discussion and Analysis. l1age 82
| 74. |
Please
revise this section and the section titled “information about PharmAthene”
to define technical terms that would not be understood by an
ordinary
reasonable investor the first time you use
them.
|
We
believe that most of the terms used are generally known to investors in
biotechnology companies but we have revised this section and the section
titled
“information about PharmAthene” to provide some definitions of terms which we
believe the Staff may be referring to. Please see pages 106 through
114.
Information
about PharmAthene. page
96
| 75. |
We
note the disclosure on page 97 that the target has been approached
by
companies willing to enter into sales, marketing and distribution
agreements for access to PharmAthene's government contracting
expertise.
Please revise to discuss this potential aspect of your business
and
explain how this will affect future operations.
|
We
have
revised this section to discuss this potential aspect of Pharmathene’s business
and to explain how this could affect future operations. Please see page
107.
| 76. |
Please
revise to provide the basis belief that Protexia could be
used
to
treat cocaine and heroin
addiction.
|
We
have
revised this section to provide the basis belief that Protexia could be
used to
treat cocaine and heroin addiction. While we have not cited articles or
studies,
such literature does exist to support the assertion. Please see page 107.
| 77. |
We
note the removal of disclosure that was present in Siga’s proxy from pages
111 to 122. Please advise how the disclosure that has been removed
no
longer applies.
|
We
note
the Staff’s comment but advise the Staff that the disclosure contained in the
SIGA proxy statement at pages 111 through 122 was contained in the Preliminary
Proxy Statement at pages 97 through 107 and is now contained in Amendment
No. 1
to the Preliminary Proxy Statement at pages 107 through 127.
17
| 78. |
Under
the caption “intellectual property,” please revise to disclose the
estimated amount spent during the last three fiscal years on
research and
development. Also, please refer to Item 101 (c)(iv) and revise
your
disclosure under the noted caption accordingly.
|
We
have
revised the discussion contained under the caption “Intellectual Property” to
disclose the estimated amount spent during the last three fiscal years
on
research and development and have revised the disclosure regarding intellectual
property to more fully comport with the requirements of Item 101(c)(iv)
of
Regulation S-K. Please see page 114.
| 79. |
In
order to aid your shareholders understanding of potential expenses,
please revise
to briefly discuss the current compensation arrangements for
PharmAthene
management that will remain with the resulting company.
|
We
have
revised the disclosure in this section to briefly discuss the current
compensation arrangements for members of PharmAthene management that will
remain
with the resulting company. Please see page 117.
| 80. |
Please
revise your disclosure under the caption of “Employees” on page 107 to
disclose your total number of employees.
|
We
have
revised our disclosure under the caption “Employees” to disclose PharmAthene’s
total number of employees. Please see page 118.
Directors
and Management of HAQ following the Merger with PharmAthene, page 121
| 81. |
Please
revise to clarify that investors should not place undue reliance
on the
growth of MedImmune disclosed on page 121.
|
We
have
revised Mr. Wright’s biographical information to indicate that investors should
not place undue reliance on the growth of MedImmune. Please see page 131.
Certain
Relationships and Related Party Transactions. page 126
| 82. |
Please
revise to quantify the amount of reimbursable expenses that remain
outstanding.
|
We
have
revised the discussion to quantify that there are no reimbursable expenses
that
remain outstanding. Please see page 136.
| 83. |
It
is not clear why the public warrants owned are not included in
the
computations for this section, Please
advise.
|
18
We
have
revised the table to include the public warrants.
| 84. |
Please
revise to include the figures for the table on page 129 that
discloses the
anticipated ownership percentages following the business
combination.
|
We
have
revised the disclosure to include the figures for the table on page 139
that discloses the anticipated ownership percentages following the business
combination.
Beneficial
Ownership of Securities. page 128
| 85. |
In
the footnotes on page 130, please revise to fill in the blanks.
|
We
have
revised the footnotes to the Beneficial Ownership Table and completed the
table.
Please see page 139.
Financial
Statements
Healthcare
Acquisition Corp. - Statements of Cash Flows, page
FS-4
| 86. |
Your
operating activities column for the three months ended September
30, 2006
does not foot. Please revise your Statements of Cash Flows
accordingly.
|
As
stated
in the forepart of this letter, the financial statements, disclosure and
MD&A have been revised to reflect December 31, 2006 figures.
Note
2: Nature of Operations and Summary of Significant Accounting Policies.
page
FS-5
| 87. |
We
note your disclosure at page FS-5 indicating, “Although the Company will
seek to have all vendors, prospective target businesses or
other entities
it engages, execute agreements with the Company waiving any
right, title,
interest or claim of any kind in or to any monies held in the
Trust Fund,
there is no guarantee that they will execute such agreements”. Tell us if
your auditor has executed such an agreement. If so, tell us
why your
auditor remains independent after signing the above waiver
agreement.
Please refer to the Codification of Financial Reporting Policies,
Section
602.02.b.iv., Unpaid Prior Professional Fees, for further guidance.
|
HAQ’s
auditor has not, and will not in the future, execute a waiver
agreement.
Report
of Independent Audit Questionnaire FS-43
| 88. |
The
audit report for PharmAthene, Inc, fails to indicate the city
and state
where the report was issued. Please revise the report to comply
with
Article 2-02 of Regulation
S-X.
|
19
The
new
financial statements and audit opinion include the proper
disclosure.
General
| 89. |
Please
note the financial statement updating requirements of Rule 3-12
of
Regulation S-X.
|
As
stated
in the forepart of this letter, the financial statements, disclosure and
MD&A have been revised to reflect December 31, 2006 figures.
If
you
have any questions, please contact the undersigned at 212-370-1300, or
Matthew
P. Kinley, the Company’s President, at 515-244-5746.
|
Very
truly yours,
|
||
|
ELLENOFF
GROSSMAN & SCHOLE LLP.
|
||
|
By:
|
Brian
C. Daughney
|
|
|
Brian
C. Daughney
|
||
|
cc:
|
Duc
Dang
|
|
David
Link
|
|
|
John
Pappajohn
|
|
|
Matthew
P. Kinley
|
|
|
Jeffrey
Baumel, Esq.
|
20