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United States securities and exchange commission logo
September 12, 2022
Daniel O Connor
Chairman and Chief Executive Officer
Larkspur Health Acquisition Corp.
100 Somerset Corporate Blvd., 2nd Floor
Bridgewater, New Jersey 08807
Re: Larkspur Health
Acquisition Corp.
Registration
Statement on Form S-4
Filed August 12,
2022
File No. 333-266838
Dear Mr. O Connor:
We have reviewed your registration statement 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 this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4
Summary of the Proxy Statement/Prospectus
ZyVersa Therapeutics, Inc., page 18
1. Please revise the first
sentence of the section to clarify the development status of
ZyVersa's business. In
this regard, we note that you identify ZyVersa as "clinical stage";
however, the
disclosures elsewhere in the proxy/prospectus indicate that the company has
not conducted any
clinical trials to date. Also revise to highlight ZyVersa's history of net
losses and the going
concern opinion issued by its auditors.
2. Please revise the
summary here and on page 98 to clarify VAR 200's current stage of
clinical development
and specify which license agreements are related to VAR 200 and IC
100.
Daniel O Connor
FirstName LastNameDaniel
Larkspur Health Acquisition O Connor
Corp.
Comapany 12,
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2022 Health Acquisition Corp.
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Opinion of Financial Advisor to Larkspur, page 20
3. Please revise to explain why the Larkspur Board obtained a fairness
opinion and clarify
the financial point of view used by the fairness advisor. In this
regard, also tell us
whether, and if so, how the fairness advisor considered fairness from
the financial point
of view of unaffiliated shareholders.
Interests of Larkspur's Directors and Officers in the Business Combination,
page 23
4. Please revise the conflicts of interest discussion so that it
highlights all material interests
in the transaction held by the sponsor and the company s officers
and directors. This
could include fiduciary or contractual obligations to other entities
as well as any interest
in, or affiliation with, the target company. In this regard, please
ensure that the discussion
includes:
all of the interests listed on pages 82, 144, and 145;
which directors and officers of Larkspur may be deemed to have or
share beneficial
ownership of the founder shares;
the risk that the sponsor will benefit from the completion of a
business combination
and may be incentivized to complete an acquisition of a less
favorable target
company or on terms less favorable to shareholders rather than
liquidate;
that the sponsor and its affiliates can earn a positive rate of
return on their investment,
even if other SPAC shareholders experience a negative rate of
return in the post-
business combination company;
how the board considered these conflicts in negotiating and
recommending the
business combination.
5. Please quantify the aggregate dollar amount and describe the nature of
what the sponsor
and its affiliates have at risk that depends on completion of a
business combination.
Include the current value of loans extended, fees due, and
out-of-pocket expenses for
which the sponsor and its affiliates are awaiting reimbursement.
Provide similar disclosure
for the company s officers and directors, if material.
6. Your charter waives the corporate opportunities doctrine. Please
address this potential
conflict of interest and whether it impacted your search for an
acquisition target.
Expected Accounting Treatment, page 25
7. We note that the merger will be accounted for as a reverse
recapitalization with ZyVersa
being the accounting acquirer. This determination is primarily based
on ZyVersa
stockholders comprising a relative majority of the voting power of the
Combined
Entity, having the ability to nominate a majority of the members of
the Board of the
Combined Entity, and the Combined Entity s senior management will
comprise of the
senior management of ZyVersa. Your disclosures on page 170 indicate
that in a no
redemption situation, ZyVersa stockholders will only own 46.7% of the
shares
outstanding. Please address your consideration of this factor in
determining that ZyVersa
Daniel O Connor
FirstName LastNameDaniel
Larkspur Health Acquisition O Connor
Corp.
Comapany 12,
September NameLarkspur
2022 Health Acquisition Corp.
September
Page 3 12, 2022 Page 3
FirstName LastName
stockholders will comprise a relative majority of the voting power.
Please also further
help us understand your consideration of the guidance in ASC
805-10-55-10 through 55-
15 as far as determining the accounting acquirer by telling us the
total number of expected
Board members and the number that can be elected or appointed by the
ZyVersa
shareholders. Please also tell us how many senior management positions
will be
comprised of the senior management of ZyVersa.
Risk Factors
Our business is dependent on the successful development, regulatory approval
and
commercialization of our product candidates. . ., page 42
8. We note your disclosure on page 43 that an initial request for an
Orphan Drug Designation
for FGFS "was unable to be granted by the FDA . . .based on submission
of preclinical
data generated on a prevention model[.]" Please revise here, and
elsewhere, where
applicable, to clarify who submitted this request, when it was
submitted and the reasons
FDA provided for not approving the designation.
Risks Related to Ownership of Combined Entity Common Stock and this Business
Combination,
page 73
9. Please highlight the material risks to public warrant holders,
including those arising from
differences between private and public warrants. Clarify whether
recent common stock
trading prices exceed the threshold that would allow the company to
redeem public
warrants. Clearly explain the steps, if any, the company will take to
notify all
shareholders, including beneficial owners, regarding when the warrants
become eligible
for redemption.
Insiders will continue to have substantial influence over the Combined Entity
after the Closing,
which could limit. . ., page 76
10. We note that this risk factor appears internally inconsistent. In this
regard, the first
paragraph assumes maximum redemptions while the last paragraph assumes
no public
redemptions. Please reconcile or advise.
The Proposed Charter will provide, subject to limited exceptions, that the
Court of Chancery will
be the sole and exclusive forum. . ., page 78
11. Please revise to include the risks that your exclusive forum provision
may result in
increased costs for investors to bring a claim.
The Business Combination Agreement
Background of the Business Combination, page 100
12. We note your disclosure on page 103 that during January 2022 "Larkspur
worked with
A.G.P./Alliance Global Partners, the underwriter in Larkspur s
initial public offering, to
get their understanding of ZyVersa." Please disclose whether, in
addition to serving as
Daniel O Connor
FirstName LastNameDaniel
Larkspur Health Acquisition O Connor
Corp.
Comapany 12,
September NameLarkspur
2022 Health Acquisition Corp.
September
Page 4 12, 2022 Page 4
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Larkspur's underwriter, A.G.P./Alliance Global Partners served in any
formal or informal
advisor capacity and clarify its role in the business combination
process.
13. Please revise the disclosure on page 103 to identify the material
terms of the letter of
intent proposal, including any material terms that differed from the
February 3rd term
sheet.
14. We note that the transaction consideration was provisionally valued at
$130 million in
February 2022, but by June 2022, "based upon a decline in the market
conditions and
market feedback, Larkspur and ZyVersa agreed to revise the transaction
consideration to
$85 million." Please briefly disclose the market conditions and market
feedback that led
to this decrease in value. In this regard, we note that the Business
Combination
Agreement was revised multiple times during the pendency of the
business
combination. If these revisions included changes to the consideration
amount, please so
specify.
15. Please revise the Background section to clarify the due diligence that
Larkspur
conducted. In this regard, we note numerous general references to due
diligence but it is
unclear what aspects of ZyVersa business and/or issues were the most
significant from
Larkspur's perspective.
Recommendation of the Larkspur Health Acquisition Corp. Board and Reasons for
the Business
Combination, page 107
16. We note your disclosure on page 108 that ZyVersa has established a
relationship with the
University of Miami Miller School of Medicine to discover, in-license,
develop, and
commercialize therapeutics. Please revise to disclose the material
terms of this
arrangement. Please also file the agreement as an exhibit pursuant to
Item 601(b)(10) of
Regulation S-K. For additional guidance concerning oral contracts,
please refer to
Compliance Disclosure Interpretations, Regulation S-K, Q. 146.04.
Opinion of Cassel Salpeter & Co., LLC, page 116
17. We note your disclosure on page 117 that Cassel Salpeter & Co., LLC
reviewed ZyVersa's projections for the years ending December 31, 2022,
2023 and 2024
and your disclosure on page 118 that Cassel Salpeter used and relied
upon the Projections
for purposes of its analyses and opinion. Please disclose these
projections and any "other
internal financial information" upon which Cassel Salpeter & Co.
relied to render its
fairness opinion.
18. We note that Cassel Salpeter conducted: (1) a selected companies
analysis; (2) a selected
transactions analysis; and (3) a selected initial public
offering/reverse merger analysis and
that, for each analysis, Cassel Salpeter utilized data that it "deemed
relevant." Please
disclose the criteria it used to determine relevance. Additionally:
for the selected companies analysis, denote which of the selected
companies
had "Less Than $10,000 2023 E Revenue."
Daniel O Connor
FirstName LastNameDaniel
Larkspur Health Acquisition O Connor
Corp.
Comapany 12,
September NameLarkspur
2022 Health Acquisition Corp.
September
Page 5 12, 2022 Page 5
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for the selected transactions analysis, disclose the resulting
high, low, mean and
median financial data;
for the selected IPO/reverse merger analysis, denote which of
the selected
transactions occurred "prior to Phase I trials."
Proposal No. 2 - The Charter Proposal, page 146
19. Please revise to include Annexes B and C with highlighted changes.
With regard
to Proposal 2 and with reference to Rule 14a-4(a)(3) , please provide
holders with an
opportunity to express a view with respect to each of the amended
supermajority voting
provisions contained in the proposed charter.
Unaudited Pro Forma Condensed Combined Financial Information, page 162
20. Adjustment 4(d) reflects an issuance of $7 million of Series A
preferred stock whereas
disclosures elsewhere, including on page 31, indicate an issuance of
$23.2 million of
which $16.2 million will be used to settle certain liabilities and
transaction costs. It is not
clear why the $23.2 million is not reflected as the issuance amount in
the pro forma
financial information with additional adjustments to show the payments
made to settle
liabilities and transaction costs. Please advise or revise as
necessary.
21. Regarding adjustment 4(g), it is not clear why the adjustment does not
also impact APIC.
Please advise or revise as necessary.
22. Your disclosures on page F-25 indicate that redemptions cannot cause
the Company s net
tangible assets to fall below $ 5,000,001. Please help us understand
what consideration
was given to this in the maximum redemption scenario.
23. It is not clear why the pro forma statement of operation for the year
ended December 31,
2021 does not appear to reflect the transaction costs discussed in
note 4(c). We remind
you of the updated guidance in Article 11-02(a)(6) of Regulation S-X
and Section II.D of
SEC Release 33-10786 which includes guidance regarding the inclusion
of transaction
accounting adjustments for nonrecurring items. Please advise or revise
as necessary.
24. We note your disclosures on page F-57 regarding the Series A Preferred
Stock being
convertible in certain situations including the closing of a
transaction with a special
purpose acquisition company ( SPAC ) listed on the Nasdaq Stock
Market in which the
Company would become a wholly owned subsidiary of the SPAC. Please
address what
consideration was given to these terms in determining how to reflect
the Series A
Preferred Stock in your pro forma financial information.
25. In regards to the new Series A Convertible Preferred Stock Financing
addressed in
adjustment 4(d), please expand your disclosures to discuss any
redemption terms and
correspondingly how you determined these shares should be classified
in equity pursuant
to ASC 480.
Daniel O Connor
FirstName LastNameDaniel
Larkspur Health Acquisition O Connor
Corp.
Comapany 12,
September NameLarkspur
2022 Health Acquisition Corp.
September
Page 6 12, 2022 Page 6
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Legal Proceedings, page 177
26. Your disclosures on page 177 indicate that there is a risk factor
section titled Risk
Factors Risks Related to the Company ZyVersa is subject to
claims and lawsuits
relating to intellectual property and other related matters, which
could materially
adversely affect ZyVersa s reputation, business and financial
condition..." It is not clear
where this risk factor section is provided. Please also address your
consideration of
the disclosures required by ASC 450-10-50 regarding any open legal
matters.
Information About ZyVersa
Our Pipeline, page 185
27. With reference to your disclosure on page 184, please revise the
pipeline table on page
186 so that it does not appear that you have conducted a Phase 1 trial
for your lead
candidate. Also, add disclosure by footnote to clarify how the
pre-clinical stage differs
from the development stage.
VAR 200 Opportunity, page 200
28. We note your disclosure that focal segmental glomerulosclerosis and
Alport Syndrome are
orphan indications. Please balance this disclosure with a statement
that the FDA has not
yet granted orphan drug designation to VAR 200 in either indication.
Strategic Alliances and Arrangements, page 202
29. Please file your license agreements with L&F Research LLC and
InflamaCORE, LLC
as exhibits pursuant to Item 601(b)(10) of Regulation S-K or tell us
why you do not
believe you are required to file these agreements. Moreover, provide
disclosure about any
termination provisions found in these license agreements and quantify
obligations that you
agreed to pay to InflamaCORE for its Selexis license. If either of
these agreements are
sub-licensed from the University of Miami, please so specify. We note
disclosure to this
effect on pages 112 and 113.
Intellectual Property, page 204
30. Please revise your discussion of the intellectual property connected
to the license
agreements to: (1) disclose the type of patent protection in the L&F
License Agreement
and (2) specify the jurisdiction of the "selected foreign countries"
for the patent rights in
both license agreements. Additionally, ensure that the related patent
disclosure connected
to these licenses on pages 112 and 113 is aligned with the disclosure
on this page.
31. We note your disclosure on page 205 that you have issued patents[.]
Please clarify
whether ZyVersa has any material patents or patent applications
outside of those
connected to the L&F or InflamaCORE License Agreements. If so, revise
your disclosure
to include the specific products or technologies to which the patents
relate, the type of
Daniel O Connor
Larkspur Health Acquisition Corp.
September 12, 2022
Page 7
patent protection obtained (composition of matter, use or process),
the jurisdiction of the
patents, and the expiration year
Management of the Combined Entity Following the Business Combination, page 244
32. For each director and executive officer, please revise your disclosure
to include the
specific experience, qualifications, attributes or skills which led
the board to conclude that
such person should serve as a director of the company. Refer to Item
401(e)(1) of
Regulation S-K.
Beneficial Ownership , page 251
33. Please revise your disclosure to identify the natural person or
persons who have voting
and/or investment control of the shares held by the entities
affiliated with INCON Co.,
Ltd.
Certain Relationships and Related Party Transactions, page 255
34. Please file your option agreement with the Brio Financial Group as an
exhibit pursuant to
Item 601(b)(10) of Regulation S-K or tell us why you do not believe
you are required to
file this agreement.
ZyVersa Related Person Transactions, page 256
35. Please file these agreements exhibits pursuant to Item 601(b)(10) of
Regulation S-K or tell
us why you do not believe you are required to file them:
2021 Promissory Notes;
Master License Agreement with Incon, Ltd.;
2016 Registration Rights Agreement.
Note 4. Note Receivable, page F-47
36. Please tell us the accounting basis for classifying the L&F Note as a
contra-liability
against the milestone payments included in accrued expenses rather
than as a reduction of
stockholders equity. Tell us your consideration of ASC 505-10-45-2
and SAB Topics 4E
and 4G.
Put Option, page F-54
FirstName LastNameDaniel O Connor
37. Regarding the redeemable common stock, please provide the disclosures
required by ASC
Comapany NameLarkspur
480-10-S99 Health
including Acquisition
a description Corp.
of the accounting method used to
adjust the
redemption
September 12, 2022amount.
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Daniel O Connor
FirstName LastNameDaniel
Larkspur Health Acquisition O Connor
Corp.
Comapany 12,
September NameLarkspur
2022 Health Acquisition Corp.
September
Page 8 12, 2022 Page 8
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Financial Statements ZyVersa Therapeutics, Inc.
Note 9. Stockholders Deficiency
Series A Preferred Stock Financing, page F-66
38. You determined that the Deemed Liquidation Events were within the
control of the
Company and, therefore, the Series A Preferred Stock should be
classified as permanent
equity. Please disclose the types of deemed liquidation events you
considered pursuant to
ASC 480-10-S99-3A-3.f, as well as please confirm these deemed
liquidation events result
in all of the holders of equally and more subordinated equity
instruments of the entity
being entitled to also receive the same form of consideration.
General
39. We note that A.G.P./Alliance Global Partners was the underwriter for
Larkspur's initial
public offering and that Larkspur worked with A.G.P/Alliance Global
Partners "to get
their understanding of ZyVersa." We also note that BTIG, LLC and Noble
Capital
Markets provided advisory services to ZyVersa. We further note press
reports that certain
financial advisors are ending their involvement in SPAC business
combination
transactions. Please tell us, with a view to disclosure, whether you
have received notice
from any of these institutions about them ceasing involvement in your
transaction and
how that may impact your deal or any deferred compensation owed to
such company. In
addition, disclose whether any other financial advisor served the
parties, or advise.
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.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Nudrat Salik at 202-551-3692 or Terence O'Brien at
202-551-3355 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Dillon Hagius at 202-551-7967 or Joe McCann at 202-551-6262 with any
other
questions.
Sincerely,
Division of
Corporation Finance
Office of Life
Sciences
cc: Matt Mamak