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United States securities and exchange commission logo
June 4, 2021
Sean McClain
Chief Executive Officer
AbSci Corp
101 E. 6th Street, Suite 350
Vancouver, WA 98660
Re: AbSci Corp
Draft Registration
Statement on Form S-1
Submitted May 6,
2021
CIK No. 0001672688
Dear Mr. McClain:
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 on Form S-1 submitted May 6, 2021
Prospectus Summary, page 1
1. We note that certain of
your statements may suggest that you are involved in various
clinical trials or
related processes, such as "[e]ight of the Active Programs are focused on
developing production
cell lines for partners biologic drug candidates (five preclinical,
one Phase 1, one Phase
3, and one animal health), reflecting our 2018 commercialization
of our Cell Line
Development (CLD) applications" and "we have CLD programs for one
Phase 1 candidate and
one Phase 3 candidate, each of which is currently in clinical
development using drug
substance manufactured through other technologies." Please
revise to clarify that
your partners are responsible for all pre-clinical and clinical testing of
your products.
Additionally, please revise your Prospectus Summary to include a
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statement to communicate that you are not participating in preclinical
validation, clinical
trials, or seeking FDA approvals for your products.
2. We note your statements that you are "replacing the fragmented steps
and inefficiencies of
the conventional biologic drug discovery and cell line development
processes with our
fully integrated, end-to-end platform designed to create new and
better biologics and
accelerate their advancement into clinical trials and ultimately into
the marketplace where
they can serve patients," that your platform allows you to "to expand
biological
possibilities and generate proteins intractable to produce with other
technologies to ensure
the best drug candidates have the opportunity to become therapeutic
realities for patients,"
and that "[proteins'] commercial applications extend far beyond the
realm of therapeutics
and into other industries including materials science, industrial
chemicals, cosmetics,
synthetic foods, and agriculture." Please provide a factual basis for
these statements
or characterize each statement as your belief.
3. Clarify your disclosure where you state that you are "positioned to
negotiate" license
agreements with potential downstream milestone payments and royalties.
If there is no
assurance that such arrangements will be agreed upon, please revise to
state as much or
remove this language. In this regard, tell us why you believe it is
appropriate to
include them in the definition of "Active Programs" if no contractual
arrangement for
future future licensing revenues has been entered into.
Risk Factors
General Risk Factors, page 61
4. We note risk factors starting on 63 related to being an emerging
growth company. As you
have elected to avail yourself of the extended transition period for
complying with new or
revised accounting standards under Section 102(b)(1) of the JOBS Act,
please provide a
risk factor explaining that this election allows you to delay the
adoption of new or revised
accounting standards that have different effective dates for public
and private companies
until those standards apply to private companies. Also, state that, as
a result of this
election, your financial statements may not be comparable to companies
that comply with
public company effective dates.
Market and Industry Data and Forecasts, page 69
5. We note your statement that you "obtained the industry, market and
competitive position
data used throughout this prospectus from our own internal estimates
and research, as well
as from independent market research, industry and general publications
and surveys,
governmental agencies and publicly available information in addition
to research, surveys
and studies conducted by third parties, including market information
from April 2021
Evaluate Pharma data." Please identify the parties that conducted the
independent market
research and the third parties the conducted the surveys and studies,
file a consent for the
information attributed to them, or tell us why you are not required to
do so. Refer to
Securities Act Rule 436.
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COVID-19 Pandemic, page 83
6. We note that you "experienced delays in technology development
activities due to supply
chain interruptions related to diversion of personal protective
equipment and
biotechnology research and biomanufacturing supplies to healthcare
organizations and
COVID-19 vaccine developers." If possible, please quantify the costs
associated with the
delays due to COVID-19 and disclose whether you are still experiencing
any such delays.
Key Factors Affecting Our Results of Operations and Future Performance, page 84
7. Clarify what proportion of your technology development agreements
anticipate that your
partners will elect a license or enter into license agreement
following the completion of
your technology development activities. Revise to specify what you
mean when you say
that such agreements "anticipate" the election or entry into a license
agreement. If there is
no assurance that any of your partners will enter into such
agreements, please state as
much.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 87
8. Please expand and revise your discussion under Results of Operations
to provide a more
detailed analysis for each material quantitative change in operating
measures from period
to period. While you discuss certain factors to which changes are
attributable, you do not
discuss and analyze known material trends, events, demands,
commitments, uncertainties,
and related underlying reasons or drivers. For example, you attribute
the increase in
technology development revenue to an increase in the number of
technology development
agreements and the achievement of additional project-based milestones
under such
agreements. However, you do not discuss the uncertainties of the
timing of payments
under your technology development and other partner agreements as they
are subject to
the achievement of project milestones and your partners decisions
to initiate or continue
the technology development work.
On a related matter, please revise to quantify factors to which
changes are attributed. For
example, you disclose that the increase in research and development
expenses is primarily
attributable to increased headcount, and related personnel costs,
allocation of facility
overhead, and increased purchases of necessary consumables, but do not
quantify those
impacts.
For guidance, refer to Item 303 of Regulation S-K.
Liquidity and Capital Resources
Cash Flows, page 91
9. You disclose that the increase in cash used in operating activities
was primarily
attributable to the increase in net losses and changes in net working
capital. Please
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expand your discussion to disclose the material factors that impact
the comparability of
operating cash flows in terms of cash and quantify each factor
indicated, so that investors
may understand the magnitude of each. Your discussion should focus on
factors that
directly affect cash, and not merely refer to net losses, which are
recorded on an accrual
basis. Refer to Item 303(b) of Regulation S-K.
Limitations of existing approaches, page 105
10. Clarify the source of the information you provide here with respect to
the quantified
information you provide about conventional fragmented approaches. This
comment also
applies to the various depictions you offer under "Advantages of our
Integrated Drug
Creation Platform."
Intellectual Property, page 127
11. Please disclose the type of patent protection that you have for each
of your patents.
Material Agreements, page 129
12. We note your statement on page 2, that your current partners include
three of the top 20
pharmaceutical companies based on 2020 global revenues, on page 22,
that your top 2
partners accounted for 77% of your revenue and that you enter into
Technology
Development Agreements with each of your partners. Please revise your
disclosure to
include the material terms of the Technology Development Agreements.
Notes to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Fair Value of Financial Instruments, page F-7
13. You disclose that the carrying values of certain financial
instruments, including the long-
term debt, approximate fair value. Please revise to provide all the
disclosures required
by ASC 825-10-50-10.
14. Your financial instruments include a Fee in lieu of Warrant Liability.
Please tell us, in
sufficient detail, what this represents, how it was accounted for, and
the related dollar
amount, including the financial statement line item in which it is
recorded.
Revenue Recognition, page F-8
15. Please tell us your consideration of disclosing disaggregated revenue
recognized from
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contracts with customers into categories that depict how the nature,
amount, timing, and
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uncertainty Corp and cash flows are affected by economic factors.
Refer to ASC
of revenue
June 4,606-10-50-5.
2021 Page 4
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Exhibits
16. We note your disclosure on page 32 that Sartorius AG supplies you with
systems and
related equipment and consumables, which are "critical" to to your
business and that you
are "materially reliant" on the liquid handling robotics and
associated consumables
produced solely by Hamilton Company. We also note your disclosure that
"[a]ny
disruption in the supply chain for these products would materially
affect our business."
Please file the supply agreements with Sartorius AG and Hamilton
Company as exhibits.
Refer to Item 601(b)(10) of Regulation S-K.
You may contact Stephen Kim at (202) 551-3291 or Rufus Decker at (202)
551-3769 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Cara Wirth at (202) 551-7127 or Mara Ransom at (202) 551-3264 with any
other
questions.
Sincerely,
Division of
Corporation Finance
Office of Trade &
Services
cc: Maggie Wong