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Mail Stop 03-09
March 2, 2005
Mr. Todd Derbin
Chief Executive Officer
Advaxis, Inc.
212 Carnegie Center, Suite 206
Princeton, NJ 08540
Re: Advaxis, Inc.
Registration Statement on Form SB-2
Filed February 3, 2005
File Number 333-122504
Dear Mr. Derbin:
We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
FORM SB-2
General
1. Please note that where we provide examples to illustrate what
we
mean by our comments, they are examples and not complete lists.
If
our comments are applicable to portions of the filing that we have
not cited as examples, please make the appropriate changes in
accordance with our comments.
2. Please complete all of the non-pricing blank sections of your
filing prior to filing your next amendment.
Prospectus Summary, page 3
3. Your summary does not present a balanced view of your business.
Currently, your summary is a detailed discussion of only the
positive
aspects of your company`s business and products. Please revise
the
summary to present a balanced picture. The revised discussion
should
include, among other things, your history of losses, accumulated
deficit, size of staff, extent of operations, that you have no
commercially viable products or FDA approved products, and that
you
expect to continue incurring substantial losses for the
foreseeable
future and may never achieve profitability. Please also note that
the balancing disclosure you provide should be no less prominent
than
your positive disclosure. This means that you cannot satisfy the
comment by merely providing a cross-reference to the risk factors
section.
4. Your registration statement on Form SB-2 should include all
material information related to the transaction you are
registering.
Consequently, it is not appropriate to have disclosure related to
your filing incorporated by reference. Please remove this
statement
from the first paragraph in this section. Additionally, please
revise your prospectus to specifically include information you
previously incorporated by reference. We may have further
comment.
5. Please disclose your website URL pursuant to Item 101(c)(3) of
Regulation S-B.
6. As you have chosen to include a summary of your strategy,
please
revise to include a discussion of the risks and obstacles you must
address in implementing this strategy.
7. Please disclose in the Summary, a discussion of your
independent
accountant`s statement as it relates to your ability to continue
as a
going concern.
Risk Factors
General
8. Please revise the risk factors where appropriate to replace
generic language with specific disclosure of exactly how these
risks
have affected and will affect your operations, financial condition
or
business, and if practicable to quantify, the specific and
immediate
effects to investors of each risk that you have identified. For
example, you use general phrases such as "adversely affect" or
"materially adversely affected" throughout the risk factor
section.
These generic phrases are subject to varying interpretations and,
therefore, do not adequately explain the risk or concern to which
you
refer.
9. We note the discussion under "Blue Sky" on page 70. Please
include a separate risk factor to address the risk posed by
restrictions on sales to or by shareholders in states where
secondary
trading is not authorized.
10. Please include a separate stand-alone risk factor discussing
your
independent auditors` opinion that because of your losses, working
capital deficiency, and shareholders` deficiency they have
substantial doubt about your ability to continue as a going
concern.
11. Please include a separate risk factor disclosing the risks
presented by the fact that you have no manufacturing, sales,
marketing or distribution capabilities.
12. Please include a risk factor that addresses the risks
associated
with conducting clinical trials. Your disclosure should include
the
possibility of not enrolling enough patients, costs, FDA non-
approval, etc.
13. To the extent applicable, please include a risk factor, which
discusses risks associated with reliance and use of third-party
manufacturers and suppliers.
We are a development stage company ..., page 8
14. Please revise the disclosure to indicate that as a result of
continuing losses, you may exhaust your resources and be unable to
complete the development of your products. Additionally, clearly
state that your accumulated deficit will continue to increase as
you
continue to incur losses.
We will require substantial additional financing in order to meet
our
business ..., page 8
15. Please revise your disclosure to state that even if you
receive
additional financing, you may not be able to complete planned
clinical trials, development, manufacturing and marketing of any
or
all of your product candidates.
16. Notwithstanding your cross-reference to the MD& A section,
please
disclose with more specificity the consequences of not raising
sufficient long-term capital.
We must comply with significant government ..., page 9
17. As currently written, this risk factor is cumbersome and
difficult to read. Your detailed discussion of clinical trials
and
the FDA`s Fast Track programs are likely not appropriate but
rather
its description should be kept to the "Governmental Regulation"
section. Please revise the risk factor discussion to include only
that information which is relevant to explain the risk to which
you
refer to in your subheading.
Because we will not pay cash dividends, investors may have to sell
....,page 14
18. As currently worded, this risk factor could apply to any
issuer
or any offering. Unless there is unique or company specific
reason
for including this type of disclosure, please remove it from this
section. Please revise or advise.
The biotechnology and biopharmaceutical industries are
characterized
...., page 14
19. Please disclose the names of your key competitors and, to the
extent easily obtainable, their respective shares of your target
market.
The price of our common stock may be volatile ..., page 15
20. If you have experienced any of the difficulties described in
the
bullet points, please revise to describe the difficulties you have
experienced and the actual or expected consequences.
21. In order to demonstrate the volatility in your stock price,
please quantify the high and low price during each of the past
three
years
Additional authorized shares of common stock available for
issuance
...., page 19
22. Please quantify the number of shares that may be issued upon
the
exercise of outstanding options and warrants.
Shares eligible for future sale may adversely affect ..., page 19
23. Please revise to quantify the number of shares eligible for
sale
pursuant to Rule 144. If all of the shares of common stock being
registered in this transaction are subject to and would be sold
pursuant to Rule 144, please so state.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations and Plan of Operation
Overview, page 25
24. Your disclosure that the Share Exchange with Advaxis was
treated
as a reverse merger where Advaxis was the accounting acquirer
appears
to be inconsistent with your disclosure that the Share Exchange is
treated as a recapitalization of Advaxis rather than a business
combination. Since the Share Exchange with Advaxis was a capital
transaction and not a business combination, please remove any
disclosures in the filing that refer to a reverse merger or an
accounting acquirer.
Research and Development, page 26
25. Your current disclosure of research and development expenses
merely recites the amount by and how cash flows changed from one
period to the next. Please revise the discussion to explain the
significant variations in the line items between the periods
presented. Specifically you should explain why the change
occurred.
See the SEC`s guidance regarding management`s discussion and
analysis
of financial condition and results of operations (Release No. 33-
8350). For example, we note manufacturing expenses decreased by
nearly 100% for the nine months ended September 30, 2004 as
compared
to a year earlier, please explain what accounted for the change.
26. Please refer to the Division of Corporation Finance "Current
Issues and Rulemaking Projects Quarterly Update" under section
VIII -
Industry Specific Issues - Accounting and Disclosure by Companies
Engaged in Research and Development Activities. You can find it
at
the following website address:
http://www.sec.gov/divisions/corpfin/cfcrq032001.htm#secviii.
Please disclose the following information for each of your major
research and development projects:
* The costs incurred during each period presented and to date on
the
project;
* The nature, timing and estimated costs of the efforts necessary
to
complete the project;
* The anticipated completion dates;
* The risks and uncertainties associated with completing
development
on schedule, and the consequences to operations, financial
position
and liquidity if the project is not completed timely; and finally
* The period in which material net cash inflows from significant
projects are expected to commence.
To the extent that information requested above is not known or
estimable, disclose that fact and the reason why it is not known.
Accounting Policies; Impact of Growth, page 26
27. Consistent with Section V of Financial Reporting Release 72,
Commission Guidance Regarding Management`s Discussion and Analysis
of
Financial Condition and Results of Operations, please discuss
accounting estimates or assumptions that may be material due to
the
levels of subjectivity and judgment necessary to account for
highly
uncertain matters or the susceptibility of such matters to change,
and that have a material impact on financial condition or
operating
performance.
28. Please expand your disclosure to discuss the revenue
recognition
criteria outlined in Staff Accounting Bulletin No. 104 that will
be
followed when you recognize revenue for license fees and grants.
Please disclose your revenue recognition policy in Note 1,
Principal
Business Activities and Summary of Significant Accounting
Policies.
Please refer to SAB Topic 13B.
Results of Operations, page 27
Nine Months Ended September 30, 2004 Compared to the Nine Months
Ended Sept 30, 2003, page 27
29. Please expand your disclosures to clarify the reason why
certain
research and development and general and administrative expenses
changed from 2003 to 2004. For example, why did manufacturing
expenses decrease in 2004 and consulting fees increase in 2004?
Revise your disclosures comparing the periods ended December 31,
2002
and 2003, accordingly,
Business
General
30. Please supplementally advise us whether you have filed an IND
application with the FDA regarding any of the product candidates
listed in the table on page 35. We may have further comments.
Partnerships and Agreements, page 35
31. For all of the agreements described under this section, please
describe the material terms of each agreement. While you have
disclosed some provisions, please be comprehensive and consistent
in
your description for all material agreements to which you are a
party. Your discussion should include:
? All material rights and obligations of the parties to the
agreement;
? Duration of the agreement;
?????Payment terms;
?????Termination provisions, including consequences of early
termination; and
?????Any other terms that may be considered material.
Additionally, please file your agreements with Penn, Dr. Yvonne
Paterson, Dr. David Filer, AccessBio, Inc., DNA Bridges, Inc.,
UCLA,
David Carpi, Cobra Bio Manufacturing, Pharm-Olam International
Ltd.,
and Strategic Growth International, Inc.
Patents and Licenses, page 39
32. For each patent that has been issued to you, please disclose
when
each patent expires.
Executive Compensation, page 51
33. We note that Messrs. Derbin and Patton receive discretionary
bonuses and stock option awards as part of their compensation.
Please describe how these individuals` performance is determined
and
what factors are considered in evaluating it. For example, if the
grants are based on company performance, please describe how
company
performance is measured.
Principal and Management Stockholders, page 55
34. Please identify the natural persons who have voting and
dispositive power of the shares held by each of the entities
listed
under the beneficial ownership table on page 55.
Certain Relationships and Related Party Transactions, page 58
35. Please describe with specificity what services are provided to
you under the consulting agreements you have with LVEP Management,
LLC and Sentinel Consulting, Inc. Additionally, describe what
services were provided to you under the agreement you had with
Carmel
Ventures, Inc.
36. Currently you have only provided Todd Derbin`s employment
agreement supplementally. Please file all of the material
agreements
described in this section with the registration statement on
EDGAR.
Selling Stockholders, page 60
37. Please identify the natural persons who have voting and
dispositive power for the common stock held by the named entities
in
the selling stockholders table on pages 61-68.
38. We note that some of the selling stockholders may be broker-
dealers. If any of the selling stockholders are broker-dealers,
please revise to identify them as underwriters. The only
exception
to this position is if these entities obtained these securities as
compensation for underwriting services. As a result, please
revise
your disclosure on page 70 under "Blue Sky" and on page 77 in the
"Plan of Distribution" section respectively.
39. If any of the selling shareholders are affiliates of broker-
dealers, they should be so identified. We note that Sunrise
Securities Corp., David Goodfriend, Amnon Mandelbaum, Marcia
Kucher,
Derek Caldwell, Richard Stone and Nathan Low may be affiliates of
broker-dealers, please revise accordingly. In addition, please
revise your disclosure to include the following representations:
* The selling shareholder purchased in the ordinary course of
business; and
* At the time of the purchase, the selling shareholder had no
agreements or understanding to distribute the securities.
If you are unable to make these statements in the prospectus,
please
revise the prospectus to state the seller is an underwriter.
Lock Up of Certain Shares, page 75
40. Please state how many shares are subject to the lock-up
agreement.
Plan of Distribution, page 76
41. Please refer to your statement that the selling stockholders
may
pledge or grant a security interest in some or all of the shares
of
common stock owned by him and that the pledgees or secured parties
may offer and sell the shares of common stock from time to time
under
this prospectus, supplement, or an amendment to this prospectus
amending the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders
under this prospectus. Please confirm your understanding that the
Company may substitute new names for the name of the selling
stockholders by means of a Rule 424(b) prospectus only if:
a. the change is not material;
b. the number of securities or dollar amount registered does not
change; and
c. the new owners` securities can be traced to those covered by
the
original registration statement.
42. Please be advised that you may not use a prospectus supplement
to
add selling stockholders to the registration statement if their
ownership cannot be traced to securities registered in the
original
registration statement.
Financial Statements, page F-1
43. Please update the financial statements as required by Rule
310(g)
of Regulation S-B.
Balance Sheet, page F-3
44. Please remove the pro forma balance sheet that gives effect to
the issuance of securities subsequent to the balance sheet date or
tell us your basis under GAAP for this presentation. Revise your
disclosures in other sections of the filing, as appropriate.
Statement of Operation, page F-4
45. Please label all interim periods as "unaudited".
Statement of Shareholders` Equity (Deficiency), page F-5
46. It appears that you have retroactively restated for all shares
immediately outstanding after the Share Exchange instead of using
the
equivalent number of shares received by Advaxis in the
transaction.
Record any shares outstanding for the legal entity immediately
prior
to the Share Exchange and shares issued to financial advisors in
connection with the Share Exchange in the period of the
transaction.
Revise the weighted-average number of shares used in your loss per
share calculations, accordingly.
2. Intangible Assets, page F-9
47. It appears from your disclosures that no amortization expense
was
recorded in 2003. Please revise your financial statements or tell
us
your basis under GAAP for deferring the amortization of these
assets
until 2004.
4. Stock Option, page F-12
48. We note in your disclosure here that there was no fluctuation
in
the Company`s stock price from inception to December 31, 2003.
Based
on the $23.84 increase in the weighted average exercise price from
2002 to 2003 it appears that the fair value of your common stock
has
increased during 2003. Please disclose and explain to us why no
charge for stock-based compensation was recorded in 2003 due to
the
apparent increase in fair value.
49. Please disclose, and explain to us, how you accounted for the
cancellation of stock options and grants of options in stock of
Great
Expectations to employees and consultants. Please address your
compliance with paragraphs 53 and 54 of FIN 44 in your response.
6. Commitments and Contingencies, page F-13
50. It appears that you have included transactions with related
parties in this note. Please disclose all material related party
transactions in a footnote to the financial statements as required
by
SFAS 57.
Exhibits
51. We note that you have not yet filed most of your exhibits.
Please be aware that when you file the exhibits on EDGAR, we will
need time to look at them, and we may have comments.
Exhibit 5.1
52. Disclaimers of responsibility that in any way state or imply
that
investors are not entitled to rely on the opinion or other
limitations on whom may rely on the opinion are unacceptable.
Investors are entitled to rely on the opinions expressed. Please
delete the penultimate paragraph of the opinion.
FORM 8-K dated November 12, 2004, as amended
53. The commission file number on the cover page of your document
does not agree with the file number, 000-28489, used in the EDGAR
system. Please revise.
54. Please amend the filing to provide the historical financial
statements of Advaxis prior to the Share Exchange and not
financial
statements retroactively restated for the recapitalization.
Please
remove the pro forma balance sheet that gives effect to capital
raising transactions occurring after the interim balance sheet
date.
55. As a result of the recapitalization transaction, there appears
to
be a change in the registrant`s fiscal year, as Advaxis and Great
Expectations had different fiscal years. Please amend the filing
to
report the change in fiscal year as required by Item 5.03 of Form
8-K
or advise us.
* * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert this action as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
You may contact Keira Ino (202) 824-5488 or Don Abbott at
(202)
942-2819 if you have questions regarding comments on the financial
statements and related matters. Please contact Albert Lee at
(202)
824-5522 or me at (202) 942-1840 with any other questions.
Sincerely,
Jeffrey Riedler
Assistant Director
cc: Gary A. Schonwald
Reitler Brown & Rosenblatt LLC
800 Third Avenue
21st Floor
New York, New York 10022
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Todd Derbin
Advaxis, Inc.
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