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United States securities and exchange commission logo
April 13, 2021
Saurabh Saha, M.D., Ph.D.
Chief Executive Officer
Centessa Pharmaceuticals Ltd
The Dorothy Hodgkin Building Babraham
Research Campus
Babraham
Cambridge
United Kingdom CB22 3FH
Re: Centessa
Pharmaceuticals Ltd
Draft Registration
Statement on Form S-1
Submitted March 15,
2021
CIK No. 0001847903
Dear Dr. Saha:
We have reviewed your draft 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 providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. 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 the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement submitted March 15, 2021
Letter from the CEO, page i
1. To the extent that this
letter precedes the Summary, please balance the presentation and
clarify the discussion
of the asset centricity business model by explaining that you are a
newly incorporated
holding company that has acquired subsidiary companies.
Saurabh Saha, M.D., Ph.D.
FirstName LastNameSaurabh
Centessa Pharmaceuticals Ltd Saha, M.D., Ph.D.
Comapany
April NameCentessa Pharmaceuticals Ltd
13, 2021
April 213, 2021 Page 2
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FirstName LastName
Overview, page 1
2. With reference to disclosures on pages 19 and 111, please revise page
1 of the Summary
to clarify that Centessa only recently commenced operations after
simultaneously
acquiring 100% equity interests in ten pre-revenue development-stage
biotechnology
companies in January 2021. The Summary disclosure should also explain,
if true, that you
were formed by Medicxi and that each of the Centessa Subsidiaries was
in Medicxi s
portfolio at the time of the acquisition.
3. Please revise the Summary, where appropriate, to discuss how the ten
Centessa
Subsidiaries were selected for acquisition. In this regard, it should
be clear whether
Medicxi determined which of its portfolio companies would be part of
the new company
and which ones would not. To the extent that Medicxi did not control
these subsidiary
companies, please clarify whether arms-length negotiations were
conducted with each
Centessa Subsidiary and whether negotiations were conducted with other
current or
former Medicxi portfolio companies.
4. We refer to the graphic on page 2. With reference to comments 2 and 3
above, please tell
us the basis for your claim that your model attracts validated assets
and subject matter
experts. Clarify the term validated in the paragraphs preceding
the graphic. Also, tell
us why you show seven new companies in the future graphic as opposed
to a different
number.
5. We note your disclosure on page 2 that founder-subject matter experts
will be directly
incentivized and appropriately supported to develop and bring
medicines to market. We
also note your disclosure that your focus on data-driven
decision-making is aimed at
enabling you to embrace and implement a "fail fast, and fail early"
philosophy to close
programs expeditiously when data dictates. Please provide additional
disclosure regarding
how you will incentivize the founder-subject matter experts to develop
and bring
medicines to market and/or to "fail fast, and fail early."
6. We refer to a February 16, 2021 Financial Times article which quotes
your former Chief
Scientific Officer and reports that your scientists hold shares in
their unit and the overall
umbrella company, and will leave if their project fails. Accordingly,
please tell us, and
revise, as applicable, to discuss whether your founder-subject matter
experts and others
hold equity stakes in the Centessa Subsidiaries or whether these
subsidiaries are wholly-
owned by the parent.
7. Please remove the reference on page 3 to "first-in-class" as this
statement implies an
expectation of regulatory approval and is inappropriate given the
stage of development for
your programs.
Our Pipeline, page 3
8. With reference to your disclosure on page 127, please clarify in the
pipeline table or in the
Saurabh Saha, M.D., Ph.D.
FirstName LastNameSaurabh
Centessa Pharmaceuticals Ltd Saha, M.D., Ph.D.
Comapany
April NameCentessa Pharmaceuticals Ltd
13, 2021
April 313, 2021 Page 3
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FirstName LastName
text immediately below it that the Phase 3 Alert study for lixivaptan
is not a registrational
trial and that lixivaptan requires additional clinical studies prior
to submission of an NDA.
Please also make similar revisions for the table on page 152.
9. We note that PearlRiver Bio has one preclinical program that is an
"undisclosed" next
generation EFGR inhibitor. Please explain to us why this program is
sufficiently material
to your business to warrant inclusion in your pipeline table or revise
your table as
appropriate.
10. Please provide a brief narrative description of the significance of
the validation legend in
your pipeline table. In particular, please disclose what is meant by
"precedented human
activity" and "human genetics."
Our Operating Model, page 5
11. We note your disclosure on page 15 indicating that Centessa
Subsidiaries have their own
boards of directors and that conflicts of interest may result from a
corporate structure in
which there are boards of directors at the parent and subsidiary
levels. Given your
disclosure on page 98 that each Centessa Subsidiary is wholly-owned by
the Centessa
parent entity, please explain why the Centessa Subsidiaries are
retaining separate boards
of directors. Explain the duties and function of these subsidiary
boards, including what
these boards can do in the the event that they disagree with the
sufficiency of resources
provided by the parent or otherwise disagree with parent decisions
concerning how the
subsidiary operates.
Prospectus Summary
Summary Financial Data, page 12
12. Please revise to include the condensed historical predecessor and
successor financial
statements as of and for the periods ended December 31, 2020 and
December 31, 2019.
Alternatively, please tell us why you did not include this summary
historical financial
data.
13. Please revise to label your "Unaudited pro forma condensed combined
balance sheet data"
as of December 31, 2020 as "condensed combined balance sheet data" as
of December 31,
2020 since this financial information contains successor historical
condensed combined
balance sheet data as well as pro forma balance sheet data.
Risk Factors
Some of our officers currently serve, and in the future may serve, as directors
or officers of our
Centessa Subsidiaries..., page 17
14. Please expand your disclosure to identify any additional officers who
are also directors
and officers of your subsidiaries and the subsidiaries on which they
serve. Please also
clarify whether officers who serve as directors and/or officers of
subsidiaries also receive
additional compensation for serving in such capacities.
Saurabh Saha, M.D., Ph.D.
Centessa Pharmaceuticals Ltd
April 13, 2021
Page 4
Third-party claims of intellectual property infringement, misappropriation or
other violations,
page 44
15. We note your disclosure that you are aware of an opposition proceeding
at the EPO
brought by European Oppositions Limited against an EP patent owned by
the La Jolla
Institute of Allergy and Immunology. Please revise to clarify whether
this opposition
proceeding relates to one of the issued patents licensed to Capella.
If so, please also
provide such disclosure on page 235.
Use of Proceeds, page 97
16. Please revise to provide separate estimates for each of the three
candidates identified in
the first bullet point and clarify whether the net proceeds from this
offering will allow you
to complete the clinical trials you identify.
Share Capital Reorganization and Re-registration, page 99
17. Please disclose here, or elsewhere, as appropriate, to describe the
materials terms of each
contribution agreement. Also, file these agreements as exhibits
pursuant to Regulation S-
K, Item 601.
Unaudited Pro Forma Condensed Combined Financial Information
Note 3. Estimated consideration and preliminary purchase price allocation.,
page 112
18. We note that you determined the fair value of the 89,516,188 ordinary
shares issued as
part of this transaction to be $2.92 per share utilizing the recent
transaction method and
then used the option pricing method to allocate the fair value to the
ordinary shares. Please
revise your filing to disclose in more detail the underlying
assumptions utilized in the
transaction method and option pricing method including the discount
factor for lack of
marketability and how these assumptions were derived.
19. We note that you determined that the fair value of the contingent
value rights issued to
Palladio shareholders was $22.7 million and that you applied a
cumulative probability of
achieving the specified milestone and applied it to the potential
payout, which is currently
expected during the first quarter of 2022. Please revise to disclose
in more detail the
underlying assumptions utilized in this method and how these
assumptions were derived.
Funding Requirements, page 121
20. With reference to your risk factor disclosure at the bottom of page 15,
please revise to
FirstName LastNameSaurabh Saha, M.D., Ph.D.
discuss in greater detail the costs and timeline involved in building
out the larger
Comapany NameCentessa
organization. Pharmaceuticals
In addition, Ltdto clarify whether you
presently have the funds
please revise
necessary
April 13, to do
2021 Page 4 so.
FirstName LastName
Saurabh Saha, M.D., Ph.D.
FirstName LastNameSaurabh
Centessa Pharmaceuticals Ltd Saha, M.D., Ph.D.
Comapany
April NameCentessa Pharmaceuticals Ltd
13, 2021
April 513, 2021 Page 5
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Management's Discussion and Analysis of Financial Condition and Results of
Operations of
Centessa Pharmaceuticals Limited
Contractual Obligations and Other Commitments, page 123
21. Please confirm whether the CVRs will be triggered when Palladio
initiates its ACTION
Study, which you disclose is expected to commence by the first quarter
of 2022.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of
Centessa Pharmaceuticals Limited
Critical Accounting Policies
Share-Based Compensation, page 123
22. Once you have an estimated offering price or range, please explain to
us how you
determined the fair value of the common stock underlying your equity
issuances and the
reasons for any differences between the recent valuations of your
common stock leading
up to the IPO and the estimated offering price. This information will
help facilitate our
review of your accounting for equity issuances, including stock
compensation and
beneficial conversion features. Please discuss with the staff how to
submit your response.
Licensing Arrangements, page 127
23. Please expand the description of the Morphogen-IX License Agreement to
disclose the
annual licensing fee, royalty term, and termination provisions.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of The
Centessa Predecessor Group and ...
Results of Operations, page 133
24. Given the importance of your research and development expenses to your
operations,
please expand your discussion here and on pages 135 and 136 to provide
a break-out by
key projects for your research and development expenses incurred
during each period
presented.
Our Pipeline, page 151
25. To the extent not already disclosed, please disclose when each of your
subsidiaries was
founded and where its operations are based.
Pega-One, page 178
26. Please disclose whether any of the adverse events observed in the
imgatuzumab clinical
trials constituted a serious adverse event, and, if so, indicate
whether such event was
deemed treatment related.
27. We note that the disclosure in this section describes Roche's
development work on
imgatuzumab. Please revise to disclose Pega-One's business activities
since acquiring the
Saurabh Saha, M.D., Ph.D.
Centessa Pharmaceuticals Ltd
April 13, 2021
Page 6
imgatuzumab license in April 2020, including any research and
development efforts
undertaken to date.
Z Factor Limited, page 185
28. We note that ZF887 is highlighted in your Summary pipeline table on
page 3.
Accordingly, please expand your disclosure regarding ZF887 to describe
in more detail
the research done to date and additional development plans for the
near-term future.
Capella Bioscience Ltd., page 195
29. We note your disclosure on page 202 that Capella seeks to "rapidly"
develop CBS004 in
SSc with a novel clinical design strategy, followed by SLE and CLE.
Please revise this
disclosure to remove any implication that you will be successful in
commercializing your
product candidates in a rapid or accelerated manner as such statements
are speculative.
Intellectual Property and License Agreements, page 231
30. We note that for certain of your subsidaries' patent portfolios, you
disclose that the
portfolios include claims directed to the subsidaries' disclosed
product candidates and
preclinical assets, but do not clarify whether the issued U.S. and
foreign patents relate to
such product candidates and programs. Please revise your disclosure to
clarify whether
any of your issued patents include claims directed to your disclosed
product candidates
and preclinical assets and, to the extent not already disclosed,
please disclose the type of
patent protection you have (e.g., composition of matter, method, or
use).
31. Please revise your disclosure regarding Pega-One's license agreement
with Roche to
disclose the aggregate payments due upon meeting certain milestones.
Please also clarify
whether Centessa's initial public offering would trigger the issuance
of equity to Roche
and, if so, the terms of such issuance.
32. We note your disclosure on page 17 indicating that each of the
Centessa Subsidiaries
licenses intellectual property from third parties. Please revise to
disclose the terms of
material license and collaboration agreement for the following
subsidiaries, or
advise: Capella Bioscience, LockBody, Orexia Therapeutics, PearlRiver
Bio, and Janpix
Limited.
33. We refer to your disclosure on page 29 that "all of your current
programs are in-licensed
from third parties." Please confirm that where you describe certain
patent portfolios as
"owned," that these are not licensed intellectual property.
FirstName LastNameSaurabh Saha, M.D., Ph.D.
34. With reference to your disclosure on pages 46 and 48 regarding
opposition proceedings
Comapany NameCentessa
against Pharmaceuticals
certain patents, Ltd
please disclose here any contested proceedings
or third party
claims with respect
April 13, 2021 Page 6 to patents material to your subsidiaries.
FirstName LastName
Saurabh Saha, M.D., Ph.D.
FirstName LastNameSaurabh
Centessa Pharmaceuticals Ltd Saha, M.D., Ph.D.
Comapany
April NameCentessa Pharmaceuticals Ltd
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Employees and Human Capital, page 256
35. Please disclose the number of full-time employees you have. See Item
101(h)(4)(xii) of
Regulation S-K.
Executive Compensation
Narrative Disclosure to Summary Compensation Table, page 266
36. Please disclose whether the agreements with Messrs. Huntington,
Baglin, Morrell, Finlay,
and Dr. Coleman have been amended or terminated as a result of the
January 2021
business combinations.
Executive Compensation
Change in Control and other Severance Arrangement, page 270
37. We note your description of the incentivization arrangements you have
with each of Z
Factor, Morphogen-IX, and LockBody. Please disclose, where
appropriate, whether you
have incentivization arrangements with each of your other subsidiaries
and, if so, the
terms of such arrangements. Please also file these as exhibits to the
registration statement,
or tell us why you believe this is not required.
Principal Shareholders, page 280
38. Please revise footnotes 1-3 to identify the person or persons with
voting and/or dispositive
control over the shares.
Exhibits
39. Please file as an exhibit the employment agreement with your Chief
Financial Officer,
Gregory Weinhoff.
General
40. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
Saurabh Saha, M.D., Ph.D.
FirstName LastNameSaurabh
Centessa Pharmaceuticals Ltd Saha, M.D., Ph.D.
Comapany
April NameCentessa Pharmaceuticals Ltd
13, 2021
April 813, 2021 Page 8
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You may contact Tara Harkins at (202) 551-3639 or Dan Gordon at (202)
551-3486 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Irene Paik at (202) 551-6553 or Joe McCann at (202) 551-6262 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of Life
Sciences
cc: Edwin O Connor - Goodwin Procter LLP