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United States securities and exchange commission logo
December 7, 2022
Suren Ajjarapu
Chief Executive Officer
Aesther Healthcare Acquisition Corp.
515 Madison Avenue, Suite 8078
New York, New York 10022
Re: Aesther Healthcare
Acquisition Corp.
Amendment No 2. to
Preliminary Proxy Statement on Schedule 14A
Filed November 22,
2022
File No. 001-40793
Dear Suren Ajjarapu:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Amendment No. 2 to Preliminary Proxy Statement on Schedule 14A filed
November 22, 2022
General
1. We note your response
to comment 1 and we reissue it. We do not believe that your
reliance on Rule
14e-5(b)(7) with respect to the Vellar agreement is warranted as the
agreement was entered
on the same day as the announcement of the merger agreement.
The Meteora agreement
would not be compliant with Rule 14e-5; while you appear to rely
on the interpretation
in Tender Offers and Schedules CDI 166.01, that interpretation
requires the repurchase
of subject securities to be at a price no higher than the price
offered through the
SPAC redemption process. In this case, the issuance of shares to
Meteora would
constitute consideration for the subject securities and thus the price being
paid would be higher
than the price offered through the SPAC redemption process.
Suren Ajjarapu
FirstName LastNameSuren Ajjarapu
Aesther Healthcare Acquisition Corp.
Comapany7,
December NameAesther
2022 Healthcare Acquisition Corp.
December
Page 2 7, 2022 Page 2
FirstName LastName
Summary of the Proxy Statement, page 18
2. We note your response to comment 4 and reissue in part. Your revised
disclosure states
New Ocean Biomedical would be obligated to pay Meteora $51,200,000
(4,000,000
shares times the redemption price, which you estimate to be around
$10.30). The product
of 4,000,000 and $10.30 does not equal $51,200,000. Please revise or
otherwise advise.
Also, in this discussion of the total amount New Ocean Biomedical may
have to pay
Meteora at maturity, disclose New Ocean Biomedical would pay Meteora
an additional
1,000,000 shares of common stock by paying the redemption price for
the shares while
Meteora would retain the shares.
Extension Share Award, page 38
3. We note your disclosures that a portion of the extension share award
is to repay the loan
by the Sponsors for obtaining one extension to complete the business
combination. We
further note the adjustment to cash reflected in the pro forma balance
sheet as referenced
by footnote (10) on page 42. Please reflect the extension share award
in your pro forma
balance sheet and address the inconsistency with the adjustment to
cash as referenced in
footnote (10) to the pro forma balance sheet.
4. Please expand your disclosures regarding the additional 500,000 in
shares to be issued to
the Sponsors to clearly state that the Sponsors are receiving an
additional $5 million in
shares along with the reason for the issuance of the additional
shares. Revise your pro
forma financial statements to reflect the accounting for the issuance
of these additional
shares that relate to the repayment of the loan from the Sponsors.
Unaudited Pro Forma Condensed Combined Financial Information
Earnout Shares, page 38
5. We reissue prior comment 8 in requesting that you please expand your
disclosure to
include a discussion of the material terms for the Earnout Shares
along with your intended
accounting for this portion of the merger consideration to both Ocean
Biomedical and
Sponsor recipients. Revise your pro forma financial statements and
notes to include the
accounting for the earnout shares based on your analysis of the
material terms and the
relevant accounting guidance. As part of your response, provide us
with your assessment
of the material terms for each type of recipient along with your
consideration of the
guidance in ASC 480 and ASC 815-40 or ASC 718 for any employee.
Suren Ajjarapu
FirstName LastNameSuren Ajjarapu
Aesther Healthcare Acquisition Corp.
Comapany7,
December NameAesther
2022 Healthcare Acquisition Corp.
December
Page 3 7, 2022 Page 3
FirstName LastName
2. Adjustments to Unaudited Pro Forma Combined Financial Information
Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet, page 39
6. For footnote (1), please show the calculation of the adjustment amount
to cash and cash
equivalents for each scenario other than for scenarios 1 and 7. In
this regard, the
assumption of 25%, 75% and 100% redemption by the AHEA public
shareholders should
be reflected with an offset for the assumed shares acquired by Vellar
and/or Meteora
under the corresponding Backstop Agreements for scenarios 2, 3 and 4.
7. For footnote (2), please address each of the following:
For the Meteora Backstop Agreement, clarify whether the 1 million
shares Meteora is
entitled to at the maturity of the agreement is earned by Meteora
regardless as to
whether Meteora acquires zero or 4 million shares of AHAC Class A
common stock.
In this regard, we note your disclosures on page 32 in which
1,000,000 shares to
Meteora are reflected as potential sources of dilution under all
seven scenarios
provided, even though Meteora only acquires shares under scenarios
2, 3 and 4. For
those scenarios in which Meteora does not acquire any shares under
the Backstop
Agreement, tell us the specific authoritative literature that
supports reflecting the 1
million shares to be paid to Meteora at maturity as an equity
transaction.
In the penultimate paragraph on page 40, you state, In
addition, at the maturity date,
Meteora will be entitled to 1,000,000 shares of New Ocean
Biomedical common
stock. Towards the end of this paragraph, you also state, In
addition, at the
maturity date AHAC will pay Meteora 1,000,000 shares. Please
revise this
paragraph to clearly state exactly how many shares Meteora is
entitled to at the
maturity of the Backstop Agreement 1 million or 2 million
and under what
circumstances the total number of shares will be earned by
Meteora. To the extent
that the total number of shares earned at maturity varies
depending on the actual
number of shares acquired under the Backstop Agreement, clearly
disclose this.
For scenarios 2, 3 and 4, provide your calculation for the
adjustment to recognize the
liability for the Backstop Agreements, along with a discussion of
the material
assumptions and estimates made. Refer to your disclosures under
footnote (3).
Explain to us why you have not recognized the value of the
1,000,000 shares Meteora
is entitled as part of the liability for the Backstop Agreements
in the pro forma
balance sheet.
8. For footnote (5), please revise the last sentence to provide more
specific qualitative and
quantitative details about the loans due the sponsor and other
accounts payable referenced
and what specifically would need to occur for these amounts to be paid
or not be paid in
connection with this transaction.
9. We reissue prior comment 15. Please expand footnote (6) to provide the
calculation for
the adjusted number of shares Ocean Biomedical would be issued based
on the description
provided on page 38 and reflect the adjusted amount in the pro forma
presentation for
each scenario to the extent that any of those conditions are present
as of the most recent
Suren Ajjarapu
Aesther Healthcare Acquisition Corp.
December 7, 2022
Page 4
balance sheet date. If none of the factors that would reduce the
number of shares issuable
to Ocean Biomedical are present, disclose this conclusion for those
specific scenarios.
Address this comment throughout the document where the pro forma
number of shares to
be held is included along with appropriate footnote disclosure for the
number of shares
reflected. Refer to Article 11-02(a)(11)(ii)(A) of Regulation S-X for
guidance.
10. For footnote (8), we note that you have concluded that the
contingencies have been met
for the contingent liabilities of $12.4 million to be recognized and
paid in connection with
the business combination for scenarios 1-5. Please expand your
disclosures to explain
how scenarios 3 and 4 met the contingencies with reference to the
table provided at the
bottom of page 33.
Adjustments to the Unaudited Pro Forma Condensed Combined Statement of
Operations, page
42
11. For footnote (cc), we note that you have included an adjustment to
recognize the $12.4
million expense for the contingent liabilities referenced in footnote
(8) to the pro forma
balance sheet for both scenarios presented. Please provide expanded
disclosure to explain
the maximum redemption scenario in which the full amount of the
contingency would still
be met resulting in recognition of $12.4 million in expenses. In
addition, provide
disclosure for those situations in which the contingencies would not
be met and the
expense would not be recognized until a future financing of at least
$50 million. Finally,
appropriately characterize the $12 million as contingent compensation
and vendor
payments, as only the $0.4 million portion of the expense represents
contingent license
fees.
Assumptions Underlying Unaudited Ocean Biomedical Prospective Financial
Information, page
143
12. We note your statement that not all of the programs have to obtain FDA
approval or be
introduced to the market for Ocean Biomedical to be profitable. Please
revise your
disclosure to explain that while Ocean Biomedical may still obtain
profitability some day,
the more programs that are delayed, fail to obtain FDA approval, are not
introduced to the
market or are subject to delays, the less reliable the projected
financial statements will be
and LastNameSuren
FirstName the longer it willAjjarapu
take Ocean Biomedical to obtain profitability, if
it does at all.
Comapany
13. NameAesther
We note Healthcare
your response Acquisition
to comment Corp.amend your filing to
include the
22. Please
projections
December 7, 2022 prepared
Page 4 by Ocean Biomedical and provided to the Mentor Group.
FirstName LastName
Suren Ajjarapu
FirstName LastNameSuren Ajjarapu
Aesther Healthcare Acquisition Corp.
Comapany7,
December NameAesther
2022 Healthcare Acquisition Corp.
December
Page 5 7, 2022 Page 5
FirstName LastName
Guideline Transaction Method, page 147
14. We note your response to comment 25 and revised disclosure on page 147
indicating that
most of the selected companies had little to no revenues. However, our
comment was
intended to focus on the target companies in the transaction analysis,
which included
target companies with revenues ranging from $32.5 million to $397
million. Therefore,
our comment is reissued. Please clarify that Mentor did not consider
comparable
companies in its transaction analysis.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Tracey Houser at 202-551-3736 or Kevin Kuhar at
202-551-3662 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Daniel Crawford at 202-551-7767 or Suzanne Hayes at 202-551-3675 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Life
Sciences
cc: Andy Tucker, Esq.