12636 High Bluff Drive, Suite 400 | ||||
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Tel: +1.858.523.5400 Fax: +1.858.523.5450 | ||||
www.lw.com | ||||
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January 13, 2012 | Dubai | Rome | ||
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Securities and Exchange Commission | Milan | |||
Division of Corporation Finance | ||||
Securities and Exchange Commission | ||||
100 F Street, N.E. | ||||
Washington, D.C. 20549 |
Attention: | Jeffrey P. Riedler, Assistant Director | |||
Karen Ubell, Staff Attorney | ||||
Joel Parker, Senior Staff Accountant | ||||
Tabatha Atkins, Staff Accountant | ||||
Re: | ChemoCentryx, Inc. | |||
Registration Statement on Form S-1 | ||||
Amendment No. 1 Filed November 18, 2011 | ||||
Amendment No. 2 Filed January 6, 2012 | ||||
Supplemental Pages Submitted January 12, 2012 | ||||
File No. 333-177332 |
Dear Mr. Riedler:
As discussed with the Staff, we are filing this supplemental information via EDGAR on behalf of ChemoCentryx, Inc. (“ChemoCentryx” or the “Company”) with respect to the Registration Statement on Form S-1 referenced above (the “Registration Statement”), in order to provide additional disclosure to be included in the Registration Statement related to the preliminary price range for the offering previously provided orally to the Staff. Attached asExhibit A hereto please find a marked copy of pages of the Registration Statement that have been revised to reflect such additional disclosure (the “Revised Pages”). The midpoint of the price range reflected on the Revised Pages reflects a preliminary, four-dollar, price range. Prior to filing its next amendment and printing its preliminary prospectuses, the Company intends to narrow this preliminary range, based on market conditions, to a traditional, two-dollar, price range that would fall within this preliminary range. The Revised Pages are marked to show changes against Amendment No. 2 filed on January 6, 2012 (“Amendment No. 2”).
With respect to the fair market value of the Company’s common stock at the time of its last stock option grants on November 9, 2011, the Company respectfully advises that Staff that it
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believes that the $6.90 exercise price which it established for such stock options represents the fair market value of its common stock during such period for the reasons described on page 58 of Amendment No. 2. In addition, the Company respectfully suggests that this $6.90 exercise price has been validated as the fair market price of a share of its common stock during such period by the completion shortly thereafter of an arms’ length transaction between unrelated parties at the same price per share (which is described on page 58 of Amendment No. 2). Specifically, on November 18, 2011 Markus Cappel, the Company’s Chief Business Officer, sold 100,000 shares of his common stock to Thomas Oland, the Chief Executive Officer of Techne Corporation, at a price of $6.90 per share. Given Mr. Cappel’s role as the Company’s Chief Business Officer, the Company believes that it is reasonable to conclude that he was fully aware of all material facts with respect to the Company and the value of his shares at the time of this transaction. Similarly, given Techne Corporation’s status as one of the Company’s principal stockholders, the Company believes that it is also reasonable to conclude that Mr. Oland was also well informed with respect to the Company and the value of the Company’s common stock at the time of the transaction. In addition, given the size of this sale and the significance of this sum of money as a component of Mr. Cappel’s total net worth, the Company also believes that Mr. Cappel was fully motivated to obtain the maximum value for the shares he was selling. Given these factors, the Company believes that the transaction between Mr. Cappel and Mr. Oland provides a reliable valuation of the Company’s common stock during such period and respectfully suggests that it would not be reasonable to conclude that other unrelated third parties would have arrived at a higher price per share during that period in an arms’ length transaction.
On November 28, 2011, Glaxo Group Limited (GSK) exercised its option under the agreement to obtain an exclusive license for the further development and commercialization of CCX354, and two identified back-up compounds. As a result of GSK’s exercise of this option, the Company received an option exercise fee of $25 million and is eligible to receive up to $47.0 million in the aggregate for the filing of an NDA in the United States and comparable filings in other territories, up to $75.0 million in the aggregate for the regulatory approval of products for commercial sale in the United States and other territories and up to $125.0 million in sales milestones. Through the exercise of this option by GSK, the probability of the receipt of the above future milestones of $247.0 million has increased. In addition, GSK is obligated to pay the Company double-digit tiered percentage royalties with the potential to reach the mid teens on annual worldwide net sales. CCX354 is a drug candidate for the treatment of rheumatoid arthritis (“RA”), for which the Company believes there are limitations of current therapies and significant market potential for new drugs. As of 2006, more than two million Americans suffered from RA, according to a report by Data Monitor. According to The Pain Practitioner, Spring 2011 Pharmacologic Approaches to Rheumatoid Arthritis, annual treatment costs with biologic agents range from $13,000 to $30,000 per patient depending on the drug used and the dose administered.
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Any comments or questions regarding the foregoing should be directed to the undersigned at (858) 523-3959. Thank you in advance for your cooperation in connection with this matter.
Very truly yours, |
/s/ Michael E. Sullivan |
Michael E. Sullivan of LATHAM & WATKINS LLP |
Enclosures
cc: | Thomas J. Schall, Ph.D., ChemoCentryx, Inc. |
Susan M. Kanaya, ChemoCentryx, Inc. |
Alan F. Denenberg, Esq., Davis Polk & Wardwell LLP |
Thomas A. Edwards, Esq., Latham & Watkins LLP |
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Exhibit A
Revised Pages