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United States securities and exchange commission logo
August 19, 2021
Yizhe Wang, Ph.D.
Chief Executive Officer
LianBio
103 Carnegie Center Drive, Suite 215
Princeton, NJ 08540
Re: LianBio
Amendment No. 1 to
Draft Registration
Statement on Form S-1
Submitted August 9,
2021
CIK No. 0001831283
Dear Dr. Wang:
We have reviewed your amended 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.
Amendment No. 1 to Draft Registration Statement on Form S-1
Cover Page
1. Provide prominent
disclosure about the legal and operational risks associated with being
based in or having the
majority of the company s operations in China and Hong Kong.
Your disclosure should
make clear whether these risks could result in a material change in
your operations and/or
the value of your ADSs or could significantly limit or completely
hinder your ability to
offer or continue to offer securities to investors and cause the value
of such securities to
significantly decline or be worthless. Your disclosure should address
how recent statements
and regulatory actions by China s government, such as those
related to the use of
variable interest entities and data security or anti-monopoly concerns,
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has or may impact the company s ability to conduct its business,
accept foreign
investments, or list on an U.S. or other foreign exchange. Your
prospectus summary
should address, but not necessarily be limited to, the risks
highlighted on the prospectus
cover page.
2. Clearly disclose how you will refer to the holding company and
subsidiaries when
providing the disclosure throughout the document so that it is clear
to investors which
entity the disclosure is referencing and which subsidiaries or
entities are conducting the
business operations. Disclose clearly the entity (including the
domicile) in which
investors are purchasing their interest.
3. Provide prominent disclosure about the legal and operational risks
associated with being
based in or having the majority of the company s operations in China
and Hong Kong.
Your disclosure should make clear whether these risks could result in
a material change in
your operations and/or the value of your ADSs or could significantly
limit or completely
hinder your ability to offer or continue to offer securities to
investors and cause the value
of such securities to significantly decline or be worthless. Your
disclosure should address
how recent statements and regulatory actions by China s government,
such as those
related to the use of variable interest entities and data security or
anti-monopoly concerns,
has or may impact the company s ability to conduct its business,
accept foreign
investments, or list on an U.S. or other foreign exchange. Your
prospectus summary
should address, but not necessarily be limited to, the risks
highlighted on the prospectus
cover page.
Prospectus Summary, page 1
4. Disclose each permission that you or your subsidiaries are required to
obtain from Chinese
authorities to operate and issue these securities to foreign
investors. State whether you or
your subsidiaries are covered by permissions requirements from the
CSRC, CAC or any
other entity that is required to approve of you or your subsidiaries
operations, and state
affirmatively whether you have received all requisite permissions and
whether any
permissions have been denied.
5. Provide a clear description of how cash is transferred through your
organization. Quantify
any cash flows and transfers of other assets by type that have
occurred between the
holding company and its subsidiaries, and direction of transfer.
Quantify any dividends or
distributions that a subsidiary has made to the holding company and
which entity made
such transfer, and their tax consequences. Similarly quantify
dividends or distributions
made to U.S. investors, the source, and their tax consequences.
Describe any restrictions
on foreign exchange and your ability to transfer cash between
entities, across borders, and
to U.S. investors. Describe any restrictions and limitations on your
ability to distribute
earnings from your businesses, including subsidiaries, to the parent
company and U.S.
investors.
Our Pipeline, page 2
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6. We note your response to our prior comment number 2, which we reissue
in part.
Specifically with respect to your pipeline table at pages 2 and 122,
please revise to ensure
that all text is large enough to be easily legible.
7. We note the revisions to your pipeline table in response to prior
comment 3. In this regard,
please address the following:
We note you have added disclosure in the Next Step in China
column of the
pipeline table regarding the Company s plans to join BMS
future global Phase 3
trials for mavacamten in the treatment of nHCM and HFpEF.
However, we note
that narrative disclosure on pages 3, 125, 130, and 134-135,
which generally indicates
that the Company intends to develop mavacamten in its licensed
territories for these
indications, does not describe the Company s intentions or
goals with respect to
joining these development programs in any detail. To add context
supporting your
pipeline table, please revise your narrative disclosures
throughout the registration
statement to address how the Company plans to pursue the
development of
mavacamten for the treatment of nHCM and HFpEF, including its
intended
involvement in future BMS global Phase 3 trials.
We note that you appear to have indicated N/A in the
Next Step in China column
of the pipeline table for NBTXR3 for the treatment of soft tissue
sarcoma (STS). We
also note disclosure on page 125 and 139 generally indicating
that you plan to join
the NBTXR3 development program by enrolling patients in China in
certain of
Nanobiotix s potential future global pivotal trials, beginning
with Nanobiotix s
announced planned Phase 3 NANORAY-312 clinical trial in locally
advanced head
and neck cancer. However, it is not clear from these disclosures
whether your
participation in the NBTXR3 development program involves the STS
indication. If
the Company will not be involved in the further development or
commercialization of
NBTXR3 for STS in its licensed jurisdictions, it would appear
that this program is
not sufficiently material to your operations to warrant inclusion
in the pipeline table.
Please explain why you believe it is appropriate to include
NBTXR3 for STS in the
pipeline table, making clarifying revisions to your narrative
disclosures throughout
the registration statement as appropriate, or remove.
In Footnote 2 to the pipeline table, and elsewhere in the
registration statement, please
remove the reference to NBTXR3 s CE Mark approval allowing
for
commercialization in 27 countries, as these countries are not
in the Company s
licensed territory. Instead, similar to your disclosures on pages
3 and 123, please
simply state that NBTXR3 has received CE mark approval in the
European Union,
which is not in your licensed territory, for the treatment of
locally advanced
STS. Additionally, for consistency, on page 123 and in certain
other places
throughout your registration statement, please add disclosure
indicating where
approvals in certain jurisdictions are not in your licensed
territories for your product
candidates.
We acknowledge your response to prior comment 4. We now note
that you have not
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disclosed anything in the Next Step in China column of the
pipeline table for
infigratinib for second-line CCA, and that the arrow shows that
the product is
approved for this indication. While we note footnote 3
stating that infigratinib s
approval in the United States is not within your licensed
territory, the visual depiction
in combination with the lack of disclosure regarding next steps
may be misleading
and imply that the Company has no further steps left to take to
commercialize
infigratinib in China. We note your revised disclosure on pages
126, 144 and 146
indicating that you intend to pursue commercialization and
registration strategies in
[your] territories for infigratinib in second-line CCA. Please
revise these
disclosures, as well as infigratinib disclosures in your
prospectus summary and
pipeline table, to provide more context regarding how you intend
to pursue
commercialization and registration in your territories, including
when you anticipate
taking the next step toward this goal.
Our Strengths, page 4
8. We note your response to prior comment 6. The majority of the
investors listed on pages
5 and 125 of the amendment are not disclosed in the principal
stockholder table, and you
have not undertaken to provide updated information with respect to any
changes these
investors make with respect to investments in the Company either prior
to the launch of
the IPO or post-IPO. You have indicated your belief that such entities
are "significant" to
the Company since your relationships with your "broader investor base
position[s] [you]
to access and capture attractive business development opportunities,"
as you have
described on pages 1 and 121 of the amendment. Yet, while such
relationships with
investors may be significant to the Company, this does not necessarily
mean they are
material to potential investors in your offering. For these reasons,
the specific identities of
those entities not listed in the principal stockholder table do not
appear appropriate for
inclusion in the Summary of the registration statement, as such
information is not among
the key aspects of the offering or among the most significant aspects
that should be
considered by potential investors. See Item 503(a) of Regulation S-K.
Please remove this
disclosure from the Summary.
In the event you continue to include this disclosure, please explain
why you believe such
information is material, given you have not committed to undertake to
update
potential investors on changes in the holdings of these entities
either pre- or post-IPO.
Additionally, expand your disclosure as follows:
Describe the nature of the support provided by each investor
identified on pages 5
and 125 (e.g., identify the round of financing each participated
in);
Expand your disclosure on pages 5 and 125, by cross-reference or
otherwise, to
highlight that the largest investors in the "syndicate" are
related parties whose
investments in the Company are disclosed on pages 228-229, and
indicate the
aggregate percentage of the approximately $380 million in equity
financing raised
from your investor syndicate that is attributable to these
related party investors; and
Disclose whether you have agreements with any of the identified
investors for the
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placement of additional securities of the Company.
Risk Factors Summary, page 6
9. In your summary of risk factors, disclose the risks that your
corporate structure and being
based in or having the majority of the company s operations in China
and Hong Kong
poses to investors. In particular, describe the significant
regulatory, liquidity, and
enforcement risks with cross-references to the more detailed
discussion of these risks in
the prospectus. For example, specifically discuss risks arising from
the legal system in
China, including risks and uncertainties regarding the enforcement of
laws and that rules
and regulations in China can change quickly with little advance
notice; and the risk that
the Chinese government may intervene or influence your operations at
any time, or may
exert more control over offerings conducted overseas and/or foreign
investment in China-
based issuers, which could result in a material change in your
operations and/or the value
of your ADSs. Acknowledge any risks that any actions by the Chinese
government to
exert more oversight and control over offerings that are conducted
overseas and/or foreign
investment in China-based issuers could significantly limit or
completely hinder your
ability to offer or continue to offer securities to investors and
cause the value of such
securities to significantly decline or be worthless.
10. We note certain summary risk factor disclosure regarding PCAOB audit
risk in the
penultimate bullet on page 8. Please supplement the existing
disclosure by stating that
trading in your securities may be prohibited under the Holding Foreign
Companies
Accountable Act if the PCAOB determines that it cannot inspect or
fully investigate your
auditor, and that as a result an exchange may determine to delist your
securities.
11. We note your response to prior comment 9. In that regard, you have
added summary risk
factor and other risk factor disclosure on pages 7, 55-56 and 87-88 of
the amendment
indicating that "Perceptive and its affiliates engage in a broad
spectrum of activities,
including investments in the healthcare industry generally" and that
in the ordinary course
of its business activities, Perceptive's interests "may not always
coincide with the
Company's or minority ADS holders' interests." As applicable, please
revise this
disclosure to more specifically address how Perceptive's business
activities may conflict
with your or ADS holders' interests. By way of example only, disclose
whether Perceptive may invest in or advise businesses that directly or
indirectly compete
with certain portions of the Company's business or that are suppliers
or customers of the
Company.
Organizational Structure, page 9
12. We note your response to prior comment 1. Please revise the diagram to
identify which
companies are offshore holding entities and which are operating
companies.
Risk Factors, page 15
13. Given the Chinese government s significant oversight and discretion
over the conduct of
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your business, please revise your risk factors to separately highlight
the risk that the
Chinese government may intervene or influence your operations at any
time, which could
result in a material change in your operations and/or the value of
your ADSs. Also, given
recent statements by the Chinese government indicating an intent to
exert more oversight
and control over offerings that are conducted overseas and/or foreign
investment in China-
based issuers, acknowledge the risk that any such action could
significantly limit or
completely hinder your ability to offer or continue to offer
securities to investors and
cause the value of such securities to significantly decline or be
worthless.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Research and Development Expenses, page 109
14. We note your response to comment 14. For each of your key research and
development
projects, please disclose a breakdown of your research and development
expenses on a
program-by-program basis as previously requested with a reconciliation
to the research
and development expenses on the Statement of Operations. Item
303(a)(3) of Regulation
S-K requires you to discuss any significant components of revenues or
expenses in order
to understand your results of operations.
License and Collaboration Agreements, page 160
15. We note your response to prior comment 18, and we reissue in part. You
state that your
royalty obligations will terminate on a product-by-product and
country-by-country basis,
potentially until the last-to-expire patent in each such country.
Please revise your
description of the royalty terms to clarify, based on information
known to the Company as
of the date of the registration statement, when the latest of the
last-to-expire patents for a
given product is expected to expire in a given country. To that end,
you may provide a
range of years in which you expect the last-to-expire patent in each
country to expire.
You may also note, as you have in your response to prior comment 18,
that the expected
termination of the royalty obligations will depend on factors such as
the filing of
additional patents covering the licensed product(s) during the term of
the applicable
agreement, the availability and application of patent term extensions,
and/or expiration of
regulatory exclusivity for such product(s) in such countries.
16. With respect to each of your license and collaboration agreements
discussed beginning on
page 160 of the amendment, please revise the disclosure of the royalty
term to disclose the
applicable "certain anniversary" of the first commercial sale of the
licensed product at
which time royalty payments could potentially cease.
MyoKardia Exclusive License Agreement, page 161
17. Please revise your disclosure regarding your exclusive license
agreement with MyoKardia
to include each of the dates on which such agreement was amended and,
to the extent
material, describe the purpose of such amendments.
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Pfizer Strategic Collaboration Agreement, page 163
18. Please revise your discussion of your strategic collaboration
agreement with Pfizer to
include a brief description of all material terms of this agreement in
the prospectus,
including term and termination provisions.
Tarsus Development and License Agreement, page 164
19. With respect to the development and license agreement between by and
between LianBio
Ophthalmology Limited and Tarsus Pharmaceuticals, Inc., please revise
your summary of
the material terms of the agreement on page 165 of the amendment to
disclose the "certain
minority percentage" of fully diluted equity of Lian Ophthalmology
represented by
warrants you are or were obligated to issue to Tarsus under the
agreement.
Lyra License and Collaboration Agreement, page 166
20. With respect to the agreement between LianBio Inflammatory Ltd and
Lyra Therapeutics,
we note your reference on page 167 of the amendment to "tiered low
double-digit
royalties." Please revise to narrow the royalty range disclosed for
this agreement to no
more than ten percentage points.
Notes to Consolidated Financial Statements
Note 2. Significant Accounting Policies
(a) Basis of Presentation, page F-6
21. You state that the consolidated financial statements include the
accounts of the Company,
its wholly owned subsidiaries, and controlled entities, which include
the People's Republic
of China registered entities directly owned by the Company. Please
address the following:
Tell us what you mean by "controlled entities" and what your
ownership interest is in
each arrangement. Tell us the significance of these entities to
your total consolidated
financial statements.
Clarify if you have any contractual arrangements with the
controlled entities that
would result in consolidation. If such is the case, please
provide additional disclosure
of these contractual arrangements.
Clarify the accounting literature used to consolidate the
controlled entities and your
basis thereof.
Confirm that you do not have any variable interest entities, VIEs,
for which you have
concluded you are the primary beneficiary and consolidate.
If you have VIEs, please provide the disclosure required by ASC
810-10-50. If the
VIEs constitute a material part of your consolidated financial
statements, please
provide in tabular form a condensed consolidating schedule -
depicting the financial
position, cash flows and results of operations for the parent,
the consolidated variable
interest entities, and any eliminating adjustments separately -
as of the same dates and
for the same periods for which audited consolidated financial
statements are required.
Highlight the financial statement information related to the
variable interest entity
Yizhe Wang, Ph.D.
LianBio
August 19, 2021
Page 8
and parent, so an investor may evaluate the nature of assets held by,
and the
operations of, entities apart from the variable interest entity,
which includes the cash
held and transferred among entities.
Note 3. Material Agreements, page F-12
22. We note your response to our comment 23. Please address the following:
Explain the basis of your determination that the warrants issued in
connection with
your license agreements are related to the equity host instrument and
should be
classified as equity.
Clarify on page F-13 the conversion rate of the Myocardia warrants
into ordinary
shares of the Company.
You state on page F-12 that you valued the warrants to purchase
100,000 ordinary
shares in Lian Oncology, a subsidiary of LianBio, at $1.0 million. On
page F-13 you
granted warrants to purchase 170,000 ordinary shares in Lian
Cardiovascular, a
subsidiary of LianBio, valued at $33.8 million. Please help us
understand the reason
for the significant difference in valuation between the two grants,
taking into
consideration the warrants are to purchase shares of different
subsidiaries of the
company. Tell us how you determined the current price of the
underlying share of
$275.00 as disclosed in Note 9(c) on page F-19 for the MyoKardia
warrants
compared to $10.00 for the QED warrants.
Please tell us why you believe the $20.0 million upfront payment
received from
Pfizer to perform Research and Development services is appropriately
considered a
contra-R&D instead of deferred revenue. It appears that Pfizer is
considered a
customer and research and development is part of your ongoing major
and central
operations. Refer to ASC 606 and ASC 808.
You may contact Christie Wong at 202-551-3684 or Mary Mast at
202-551-3613 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Lauren Hamill at 303-844-1008 or Celeste Murphy at 202-551-3257 with
any other
questions.
Sincerely,
FirstName LastNameYizhe Wang, Ph.D.
Division of
Corporation Finance
Comapany NameLianBio
Office of Life
Sciences
August 19, 2021 Page 8
cc: Thomas Danielski
FirstName LastName