|
December
10, 2010
|
Alan
Gilbert
Direct
Phone: 612-672-8381
Direct
Fax: 612-642-8381
Alan.Gilbert@maslon.com
|
SUBMITTED VIA
EDGAR
Jim B.
Rosenberg
Senior
Assistant Chief Accountant
Division
of Corporation Finance
United
States Securities and Exchange Commission
100 F
Street, N.E.
Washington,
D.C. 20549
|
Re:
|
ZIOPHARM
Oncology, Inc. (the “Company”)
|
|
|
Form
10-K for the Fiscal Year Ended December 31,
2009
|
Filed
March 17, 2010
Form
10-K/A for the Fiscal Year Ended December 31, 2009
|
|
Filed
April 30, 2010
|
|
|
File
Number 001-33038
|
|
|
Dear
Mr. Rosenberg:
|
This
letter will respond on behalf of the Company to your comment letter dated
December 3, 2010 (the “Comment
Letter”) with respect to the above referenced documents filed by the
Company with the Securities and Exchange Commission (the “Commission”) (collectively,
the “Form
10-K”). To facilitate your review, we have included in this
letter your original comments (in bold) followed by our response, which has been
numbered to correspond to your letter.
Form 10-K for the Fiscal
Year Ended December 31, 2009
Notes to Financial
Statements
Note 8. Warrants, page
F-26
|
1.
|
We
acknowledge your response to comment 5. It remains unclear how
you determined that the “down-round” antidilution features have a
“negligible” effect on the valuation of the warrants. You
further indicate in your response that you have undertaken a valuation
using the binomial model and will use this method to value the warrants if
the variance between the two methods, in the future, is
significant. Please provide us with an analysis of the warrant
valuation using both methodologies at December 31, 2009 and each 2010
interim valuation date. To the extent there is significant
variance, please explain why using the Black-Scholes model to calculate
the fair value of the warrant liability for the above periods is
reasonable.
|
Jim B.
Rosenberg
Senior
Assistant Chief Accountant
United
States Securities and Exchange Commission
December
3, 2010
Page 2 of
3
The
Commission’s original request was prospective in nature, requesting that we
examine the applicability of using a binomial model to value the Company’s
warrants moving forward. Accordingly, the Company prepared a binomial
valuation model at September 30, 2010, which it compared to its Black-Scholes
valuation model at September 30, 2010. The result of the comparison
showed a difference of $0.01 per warrant share, or $77,906 in the aggregate,
between the two models. Based on an assessment of both quantitative
and qualitative factors under a SAB 99 materiality analysis, the Company
concluded that the difference at September 30, 2010 was not material to its
financial statements as a whole.
Because
the Commission’s original request was prospective in nature, and based on the
cost and timing involved in preparing warrant valuations using a binomial
valuation model at multiple points in time, the Company has not prepared such
valuations in connection with this response. However, differences in warrant
valuation under the two models employed will not vary considerably so long as
the Company utilizes the same input assumptions. As such, the Company
believes that the difference in warrant valuation at December 31, 2009 and each
2010 interim valuation date will also be immaterial to its financial statements
as a whole.
Similarly,
the Company believes that the difference will continue to be immaterial to the
Company’s financial statements as a whole so long as the Company utilizes the
same input assumptions. As a result, the Company believes that its continued use
of the Black-Scholes valuation model, which is considerably more cost-effective
than employing a binomial valuation model, is appropriate. The Company will
continue to monitor its input assumptions and the quantitative and qualitative
factors utilized under its SAB 99 materiality analysis, and will again
re-calculate the difference in warrant valuation between the two models if
warranted based on changes in such inputs or assumptions.
Form 10-K/A filed April 30,
2010
Item 13. Certain
Relationships and Related Transactions, and Director Independence Related Party
Transactions, page 18
Jim B.
Rosenberg
Senior
Assistant Chief Accountant
United
States Securities and Exchange Commission
December
3, 2010
Page 3 of
3
|
2.
|
We
have reviewed your response to prior comment 7. Please confirm
that in future filings you will disclose in this section that Riverbank
allocated warrants to purchase 40,298 shares of your common stock to Mr.
McInerney from its sub-placement agent
compensation.
|
In the
“Certain Relationships and Related Transactions, and Director Independence
Related Party Transactions” section of its future filings, the Company will
disclose that Riverbank Capital Securities, Inc. allocated warrants to purchase
40,298 shares of the Company’s common stock that it received as sub-placement
agent compensation to Mr. McInerney.
Should
you have any questions or comments regarding the foregoing, please direct them
to the undersigned by telephone at (612) 672-8381, or by facsimile at (612)
642-8381; or to Richard E. Bagley, the Company’s President, Chief Operating
Officer and Chief Financial Officer by telephone at (617) 259-1978, or by
facsimile at (617) 241-2855.
|
Regards,
|
|
| /s/ Alan M. Gilbert | |
|
Alan
M. Gilbert, Esq.
|
|
cc:
(via mail):
|
Dr.
Jonathan Lewis
|
Richard
Bagley
Tyler
Cook
Kevin
Lafond