ROPES & GRAY LETTERHEAD
| May 3, 2007 | Marc A. Rubenstein 617-951-7826 Marc.Rubenstein@ropesgray.com |
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, D.C. 20549
Attention: Jeffrey Riedler
Ladies and Gentlemen:
On behalf of Sirtris Pharmaceuticals, Inc. (the "Company"), submitted herewith for filing is Amendment No. 5 ("Amendment No. 5") to the Registration Statement referenced above (the "Registration Statement").
Amendment No. 5 is being filed in response to comments contained in the letter dated April 27, 2007, from Jeffrey Riedler of the Staff (the "Staff") of the Securities and Exchange Commission (the "Commission") to Christoph Westphal, the Company's Chief Executive Officer. The comments and responses set forth below are keyed to the numbering of the comments and the headings used in the Staff's letter and are based upon information provided to Ropes & Gray LLP by the Company. Where appropriate, the Company has responded to the Staff's comments by making changes to the disclosure in the Registration Statement set forth in Amendment No. 5. Page numbers referred to in the responses reference the applicable pages of Amendment No. 5.
On behalf of the Company, we advise you as follows:
Initial clinical strategy and regulatory status, page 4
Response: The Company has revised the prospectus in response to the Staff's comments. The Company has indicated, on page 4, that its IND is on hold with the FDA. The Company has further indicated that it cannot conduct clinical trials in the United States until the Company provides additional information to the FDA and the FDA accepts the Company's IND. The Company has included a description of the additional information requested by the FDA. First, the FDA requested clarification of possible adverse events in the two Phase 1a, normal volunteer, clinical studies that the Company completed in India. The Company provided to the FDA full clinical study reports of these Phase 1a clinical studies, which were completed and collected by the clinical research organization the Company engaged in India. In February 2007, the Company received a favorable response to this information from the FDA.
The Company also indicated that, in connection with the Company's IND submission, the FDA has requested additional genotoxicity and other preclinical toxicity data regarding SRT501. The Company has successfully addressed the genotoxicity request and is currently in discussions with the FDA to address their request regarding preclinical toxicity studies. Although the FDA was satisfied with the safety profile from the 28 day toxicity study that the Company completed in rodents, the Company did not show in a non-rodent species a dose level of SRT501 that produces
toxicity as requested by the FDA in February 2007. The Company is now establishing, with the FDA, an appropriate species in order to test toxicity in a second animal species. The Company expects to complete that animal toxicity study by the end of 2007, and, if the FDA finds the data acceptable, the Company expects to be able to commence clinical studies of SRT501 in the United States by 2008.
The Company has included similar disclosure in the "Business" section on page 65 of the prospectus.
Response: The Company has revised the prospectus in response to the Staff's comments. On pages 4 and 5 of the prospectus, the Company has indicated that any additional delay in acceptance by the FDA of the IND for SRT501 would delay the start of future clinical studies in the United States and the potential approval of SRT501 by the FDA. The Company expects that it will satisfactorily address all requests from the FDA in time to initiate clinical studies in the United States in 2008 but has indicated that there can be no assurance that the Company will be able to initiate such studies at such time.
The Company has also indicated, in the risk factor entitled "We may not be able to initiate and complete preclinical studies and clinical trials for our product candidates which could adversely affect our business," on page 10 and 11, that the Company's IND is on hold and that the Company cannot conduct clinical studies in the United States until the Company satisfactorily responds to requests from the FDA for certain additional information. Specifically, the Company has noted that, in order to commence clinical trials in the United States, the Company must reach agreement with the FDA on a second animal species for preclinical toxicity studies and satisfy the FDA with the results of such studies. The Company has indicated that it cannot guarantee that it will be able to successfully accomplish these activities or all of the other activities necessary to initiate and complete clinical trials as well as what the consequences of such a failure may be. Therefore the Company believes that it has addressed the primary risks associated with delay in approval, or possible non-approval, of its IND.
Capitalization, page 33
Response: The Company has revised the prospectus in response to the Staff's comments.
Critical Policies and Estimates, page 45
Stock-based compensation, page 46
Response: The Company has revised the prospectus in response to the Staff's comment. The Company began its analysis for the February 2006 grant date by using the Guideline Public Company Method as outlined in the AICPA Technical Practice Aid,Valuation of Privately-Held-Company Equity Securities Issued as Compensation (Practice Aid). The Company compiled a complete list of all biotech companies that have completed their initial public offerings
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since January 1, 2005 attached hereto as Exhibit A. For the explanation of column headings and clarifications made to Exhibit A since the response to the previous filing, please see Exhibit A of the correspondence submitted to the Staff on the Company's behalf by the Company's counsel via e-mail on April 30, 2007 and the correspondence submitted on the Company's behalf by the Company's counsel via e-mail on May 2, 2007, both sets of which were subsequently filed on Edgar with the Staff as correspondence. Since no single company is more comparable than the others to the Company, the Company decided to use the mean IPO pre-money valuation of companies in a similar general stage of development (Phase 1 and 2). Therefore, the Company shortened the list to only include companies with product candidates in Phase 1 or 2 clinical trials and excluded all companies in Phase 3 clinical trials or with marketed products. The Company analyzed two data sets 1) Phase 1 & 2 IPOs since January 2005 and 2) Phase 1 & 2 IPO's since January 2006. The midpoint between the two data sets is approximately $118 million. The Company used this value as the Expected Market Capitalization in its February 2006 valuation.
Upon completion of its Series C financing in March/April 2006, the Company believed that the Expected Market Capitalization previously used was no longer relevant as it was lower than the implied valuation of the Series C financing. Therefore, the Company followed the Guideline Transaction Method as outlined in paragraph 55 of the Practice Aid and considered transactions in equity securities of the Company with unrelated investors. Therefore, the Company increased its Expected Market Capitalization in August 2006 (based on Series C financing), December 2006 (based on initial proposed terms of the Series C-1 financing) and again in February 2007 (based on the final closing of the Series C-1 financing).
Since the Series C financing was led by an unrelated third-party investor and new investors who purchased 49% of the financing, the Company believes that it was a reliable indicator of the Company's Implied Valuation. Similarly, the Series C-1 financing was led by an unrelated third-party investor and new investors who purchased 73% of the financing, so the Company believes that it was also a reliable indicator. The Company has revised the prospectus in response to the Staff's comments.
Since the beginning of 2006, the Company increased the probability weighting of completing an IPO, therefore increasing the fair value of common stock in the IPO scenario. The table below gives the fair value as calculated in the IPO scenario for each valuation date.
| February 28, 2006 | $ | 4.99 | |
| August 30, 2006 | $ | 5.04 | |
| October 20, 2006 | $ | 5.30 | |
| December 15, 2006 | $ | 6.98 | |
| February 12, 2007 | $ | 7.82 | |
| March 1, 2007 | $ | 7.82 |
Response: The Company compiled a complete list of all biotech companies that have completed their initial public offerings since January 1, 2005. In response to the Staff's comment, the Company shortened the list to only include companies with products in Phase 1 or 2 clinical trials and excluded all companies in Phase 3 clinical trials or with marketed products. The Company believes that it is appropriate to use Phase 1 and 2 companies in its analysis because (1) some companies refer to their Phase 1b clinical trial as a Phase 2a trial, leading the Company to believe that it is at a similar stage of clinical development to Phase 1 and Phase 2 companies and (2) the data set of Phase 1 companies consists of only four companies and, therefore, is too small to be a reliable indicator of fair value. The Company has revised the prospectus in response to the Staff's comments.
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Response: The Company advises the staff that it only used the comparables in its February 2006 valuation under the Guideline Public Company Method of the Market Approach. Upon completion of its Series C financing in March/April 2006, the Company believed that the Expected Market Capitalization previously used was no longer relevant as it was lower than the implied valuation of the Series C financing. Therefore, the Company followed the Guideline Transaction Method as outlined in paragraph 55 of the Practice Aid and considered transactions in equity securities of the Company with unrelated investors. Therefore, the Company increased its Expected Market Capitalization in August 2006 (based on Series C financing), December 2006 (based on initial proposed terms of the Series C-1 financing) and again in February 2007 (based on the final closing of the Series C-1 financing).
Response: The IPO Pre-money amount in Exhibit A represents the valuation of each company immediately prior to its initial public offering. It was calculated by multiplying the number of shares outstanding immediately before the IPO by the actual IPO price. The Company used the IPO Pre-money amount in its application of the Guideline Public Company Method of the Market Approach as outlined in the Practice Aid.
Response: The Company revised its analysis to include only the IPO pre-money amounts of companies whose IPO dates were after January 1, 2005. The Company's analysis of the data set shows immaterial differences in the mean market values by shortening the timeframe to more recent IPO's.
Response: The Company confirms that it only used non-public entities as comparables since it used the pre-money valuation of companies immediately prior to their initial public offerings.
Response: The Company has revised the prospectus in response to the Staff's comments to clarify its valuation methodology. Please see the response above to Comment 4 under the first bullet.
Response: The Company has revised the prospectus in response to the Staff's comments.
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Initial clinical strategy and regulatory status, page 61
Response: The Company has revised the prospectus in response to the Staff's comments. The Company has indicated, on page 65, that, in February 2007, it received a favorable response from FDA regarding the full clinical study reports of the Phase 1a clinical studies that were completed and collected by the contract research organization the Company engaged in India.
Response: The Company has revised the prospectus in response to the Staff's comments. The Company has indicated, on page 65, that the FDA requested the dose level that produces toxicity in a non-rodent species in February 2007 and that the Company expects to complete that animal toxicity study by the end of 2007.
Note 14. Subsequent event, page F-34
Response: The Company has revised the prospectus in response to the Staff's comment on page F-30 to disclose that shares of Series C-1 redeemable convertible preferred stock are convertible at $8.82 per share. The Company also revised the prospectus on page 55 to disclose the events that led to the increase in the fair value of the underlying shares from December 2006 to the IPO range of $9-$11. The Series C-1 financing was led by an unrelated third-party investor and new investors purchased 73% of the financing. The lead investor in the financing, John W. Henry Trust, became a greater than 5% shareholder after the Series C-1 financing and therefore is included as a related party transaction.
The Company intends to commence marketing this offering as soon as possible. We would, therefore, appreciate receiving any additional comments on the Registration Statement, or receiving advice that there are no further comments on the Registration Statement, as soon as possible.
Very truly yours,
/s/ Marc A. Rubenstein
Marc A. Rubenstein
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Exhibit A
Sirtris Pharmaceuticals, Inc
Enterprise Values of Biotech IPOs since 2005
| | | | IPO Pre-Money Valuations (in thousands) | | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number | Company | IPO Date | All Biotechs | Phase 1 since 1/05 | Phase 1 and 2 since 1/05 | Phase 1 since 1/06 | Phase 1 and 2 since 1/06 | Clinical Trials | ||||||||||||
| 1 | Viacell | 1/21/05 | 200,000 | 200,000 | 200,000 | p1-stem cell transplant, also had > $30m in revenue | ||||||||||||||
| 2 | Gentium | 1/24/05 | 48,000 | 48,000 | p2-phenoxodiol | |||||||||||||||
| 3 | Favrille | 2/2/05 | 99,000 | p3-non hodgkin's lymphoma | ||||||||||||||||
| 4 | Icagen | 2/3/05 | 132,000 | 132,000 | p2-completed for sickle cell | |||||||||||||||
| 5 | Threshold | 2/10/05 | 167,000 | 1 drug marketed for hypertension, 4 additional com | ||||||||||||||||
| 6 | CardiaVascular Biotherapeutics | 2/11/05 | 1,211,000 | p3-insomnia, 5 products in trials | ||||||||||||||||
| 7 | Aspreva | 3/4/05 | 283,000 | 4 drugs in clinical trials including 2 in late sta | ||||||||||||||||
| 8 | Xenoport | 6/2/05 | 149,000 | 149,000 | p1/2-Pancreatic Cancer, p2-BPH, p1-Tumors | |||||||||||||||
| 9 | Advanced Life Sciences | 8/5/05 | 54,000 | p3-pneumonia, p2-HIV | ||||||||||||||||
| 10 | Coley | 8/10/05 | �� | 301,000 | p2-cancer, 3 p1-Hep C, asthma, cancer | |||||||||||||||
| 11 | Somaxon | 8/15/05 | 143,000 | p3-insomnia, p2-gambling,p2-smoking | ||||||||||||||||
| 12 | Sunesis | 9/27/05 | 107,000 | p3-urinary tract infection, p1-bacteria in CF | ||||||||||||||||
| 13 | Avalon | 9/29/05 | 59,000 | 59,000 | 59,000 | p1-inlicensed from Vertex | ||||||||||||||
| 14 | Accentia | 10/28/05 | 212,000 | p3-chronic rhinosinusitis, p3 lymphoma | ||||||||||||||||
| 15 | CombinatoRx | 11/9/05 | 114,000 | 114,000 | 6 p2a-immuno-inflamatory, 1 p1/2 cancer | |||||||||||||||
| 16 | Altus | 1/26/06 | 210,000 | 210,000 | p2 complete-CF, p2-growth disorders | |||||||||||||||
| 17 | Iomai | 2/1/06 | 83,000 | 83,000 | 83,000 | $ | 83,000 | $ | 83,000 | 2 p1-flu vaccine patch, p1-diarrhea patch | ||||||||||
| 18 | SGX | 2/1/06 | 60,000 | p3-3rd line leukemia, multiple p1/2 starting | ||||||||||||||||
| 19 | Valera | 2/2/06 | 97,000 | mkts prostate cancer, p3-early onset puberty | ||||||||||||||||
| 20 | Acorda | 2/10/06 | 81,000 | p3-spinal cord injury, p2-MS | ||||||||||||||||
| 21 | Alexza | 3/8/06 | 137,000 | 137,000 | 137,000 | p2a-migraines, p1-acute panic attacks, p1-acute agitation and schizophrenia | ||||||||||||||
| 22 | Targacept | 4/12/06 | 127,000 | 127,000 | 127,000 | p2 complete-AAMI, p2-alzheimers, p2-schizophrenia | ||||||||||||||
| 23 | Vanda | 4/13/06 | 159,000 | p3-schizophrenia, p3-insomnia,p2-excessive sleepiness | ||||||||||||||||
| 24 | Novacea | 5/9/06 | 104,000 | p3-prostate cancer | ||||||||||||||||
| 25 | Replidyne | 6/27/06 | 219,000 | p3-bronchitis, p2-acute otitis media, p1-skin/wound infections | ||||||||||||||||
| 26 | Osiris | 8/3/06 | 259,000 | p3-steroid refractory GvHD | ||||||||||||||||
| 27 | Trubion | 10/17/06 | 157,000 | 157,000 | 157,000 | p2b-rheumatoid arthritis | ||||||||||||||
| 28 | Cadence | 10/24/06 | 198,000 | p3-pain/fever, p3 catheter infection | ||||||||||||||||
| 29 | Achillion | 10/25/06 | 119,000 | 119,000 | 119,000 | p2-HIV, p1b-HCV | ||||||||||||||
| 30 | Catalyst | 11/7/06 | 55,000 | 55,000 | 55,000 | 55,000 | 55,000 | p1-addiction | ||||||||||||
| 31 | Emergent BioSolutions | 11/14/06 | 280,000 | market anthrax vaccine, p1-typhoid vaccine, p1-HBV vaccine, p1-strep vaccine | ||||||||||||||||
| Mean | $ | 99,250 | $ | 122,308 | $ | 69,000 | $ | 113,000 | ||||||||||||
| Median | $ | 71,000 | $ | 127,000 | $ | 69,000 | $ | 123,000 | ||||||||||||
