Manhattan
Pharmaceuticals, Inc.
48
Wall Street
New
York, New York 10005
Via
EDGAR and FedEx
Division
of Corporation Finance
Mail Stop
3561
Washington,
DC 20549-7010
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Re:
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Manhattan
Pharmaceuticals, Inc.
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Filed
September 29, 2009
File
No. 001-32639
Ladies
and Gentlemen:
On behalf
of Manhattan Pharmaceuticals, Inc. (the "Company"), I am responding to the
comments contained in the letter, dated October 8, 2009 (the "Comment Letter"),
from Jeffrey Riedler, Assistant Director, of the staff (the “Staff”) of the
Securities and Exchange Commission (the “Commission”) regarding the Company's
preliminary proxy statement on Schedule 14A (the "Proxy
Statement"). For ease of reference, set forth in bold below is the
comment to the Proxy Statement, as reflected in the Comment
Letter. The Company’s supplemental response is set forth below the
comment.
The
Company has authorized me to respond to the Comment Letter as
follows:
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1.
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Please
revise your disclosure to include all of the information that would be
required if your shareholders were voting on the merger, including the
information required by Item 14 of Schedule 14A. Refer to Note
A to Schedule 14A for further
guidance.
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In
response to the Comment Letter, the Company has considered the application of
Note A to Schedule 14A and has concluded that the proposal to approve the
amendment to the Company's charter to increase the number of authorized shares
of common stock is not also a solicitation with respect to the consummation of
the acquisition of Ariston Corporation described in the preliminary proxy
statement (the "Ariston Acquisition") or the financing upon which closing of the
Ariston Acquisition is conditioned. Further, the Company's securities
trade on the Over the Counter Bulletin Board ("OTC") and therefore the Company
would not be subject to any shareholder approval requirements under any exchange
listing rules. Unlike other situations where the vote on the proposal
being submitted to stockholders could affect whether or not the transactions are
consummated, the Company could and would consummate the Ariston Acquisition and
the financing transaction even if the stockholders rejected the proposal to
amend the Company's certificate of incorporation to increase the number of
authorized shares of Company common stock. The Ariston Acquisition is
not conditioned upon an increase of authorized shares of Company common
stock.
As of
October 19, 2009, as illustrated in the chart below, the Company had 80,167,681
shares of common stock which were authorized and available for future
issuance.
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As of
October
19,
2009
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Shares
of Common Stock authorized
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300,000,000
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Shares
of Common Stock issued and outstanding
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70,624,232
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Shares
of Common Stock reserved for issuance under option plans
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7,592,436
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Shares
of Common Stock reserved for issuance pursuant to outstanding
warrants
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86,060,096
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Shares
of Common Stock reserved for put and call rights
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55,555,555
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Shares
of Common Stock available for future issuance
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80,167,681
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As set
forth in the executed term sheet between the Company and Ariston, the maximum
number of shares of Company common stock issuable to Ariston stockholders
pursuant to the Ariston Acquisition is 31,780,904 (24,718,481 of which shares
are contingent upon achievement of post-closing milestones).
Assuming
the issuance of all 31,780,904 shares of Company common stock pursuant to the
Ariston Acquisition, the Company would still have 48,386,777 shares of
authorized common stock available for future issuance.
In
addition, the Company may issue shares of common stock in connection with a $2.5
million debt or equity financing transaction which is a condition precedent to
the consummation of the Ariston Acquisition. The Company has not
engaged a financial advisor to assist it in that financing, and, to date, there
are no specific plans for such financing. The Company has not
identified an investor, nor negotiated the terms of such a financing
transaction. Therefore, at this time, it is not possible to determine
the exact number of shares of Company common stock that may be issued in the
future in connection with such financing. However, the Company
anticipates that it may need to issue (or reserve for issuance) between
16,000,000 and 28,000,000 shares of its common stock in connection with such
financing, which is well within the 48,386,777 shares of common stock which
would be available for future issuance after giving effect to the shares
reserved for issuance in connection with the Ariston Acquisition.
Following
the Ariston Acquisition, Ariston (which would then be a subsidiary of the
Company) would continue to be the obligor under $15.5 million in aggregate
principal amount of convertible promissory notes. The Company and
Ariston expect to renegotiate the terms of those convertible promissory notes,
and if sufficient authorized shares of Company common stock are available, to
have those notes become convertible into shares of Company common stock at a
conversion price of $0.40 per share (a conversion price that would be 500% of
the current market price as of October 20, 2009). However, having
additional authorized shares of Company common stock available for Ariston note
conversion is not a condition precedent to the Ariston Acquisition.
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The
Company will revise the disclosure in the Proxy Statement to clarify that while
the Company can consummate both the Ariston Acquisition and the related (but
as-yet-undefined) $2.5 million financing, the Company is proposing the amendment
to the Company's certificate of incorporation to increase the authorized shares
of common stock to give the Company flexibility to fund future growth of the
Company and for other as-yet undetermined needs.
Accordingly,
while the Company believes that it has, and intends to, provide all material
information pursuant to Items 11 and 13 of Schedule 14A, it does not believe
that it needs to provide information required by Item 14 of Schedule 14A as Note
A to Schedule 14A is not applicable with respect to the Ariston
Acquisition.
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2.
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Please
expand your disclosure to include a discussion of the currently authorized
and unissued shares that will become available for issuance if Proposals 1
and 4 are approved; and discuss and plans to issue these shares aside from
the merger.
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In the
interests of efficiency and to avoid potentially confusing disclosure, the
Company has decided to withdraw its proposal to authorize its Board of
Directors, at their discretion, to amend the Company's Certificate of
Incorporation to implement a reverse stock split of its issued and outstanding
shares of common stock. The Company will amend its preliminary proxy
statement to remove such proposal.
* * *
This will
confirm that the Company understands that:
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·
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the
Company is responsible for the adequacy and accuracy of the disclosure in
the filing; staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action with
respect to the filing; and
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·
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the
Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
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If you
have any questions with respect to the foregoing, please feel free to call me at
(212) 582-3950.
Very
truly yours,
/s/
Michael G. McGuinness
Michael
G. McGuiness,
Chief
Operating and Financial Officer, Manhattan Pharmaceuticals,
Inc.
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cc:
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Anthony
O. Pergola, Lowenstein Sandler PC
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-3-