August 6, 2018
Ken Song, M.D.
Chief Executive Officer
Metacrine, Inc.
3985 Sorrento Valley Blvd., Suite C
San Diego, CA 92121
Re: Metacrine, Inc.
Draft Registration Statement on Form S-1
Submitted July 12, 2018
CIK No. 0001634379
Dear Mr. Song:
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
Prospectus Summary
Overview, page 1
1. Prominently disclose at the outset that only your lead product
candidate, MET409, is in
the early clinical development stage and that your other research and
development
programs are currently in the discovery stage.
2. We note your disclosure that you "have leveraged [y]our chemistry and
biology platform
to internally discover a proprietary portfolio of non-bile acid FXR
agonists." Describe in
greater detail what you mean by your chemistry and biology platform.
Ken Song, M.D.
FirstName LastNameKen Song, M.D.
Metacrine, Inc.
Comapany2018
August 6, NameMetacrine, Inc.
August 6, 2018 Page 2
Page 2
FirstName LastName
3. We note your statement that you believe MET409 "has the potential to
be a best-in-
class NASH drug with a key differentiated safety and efficacy profile
from other FXR
agonists in development." Given that safety and efficacy
determinations are solely within
the FDA's authority, please remove or further qualify this statement.
Our Approach, page 2
4. We note your assertions that you are focused on innovative drug
discovery and
development and that your capabilities enable you to "quickly and
purposefully design
drugs." Revise to balance the discussion of your approach to clarify
that you currently
have one product candidate in the early clinical stage.
Risk Factors
MET409 is an FXR agonist, a class of drugs from which there are no approved
therapies..., page
11
5. Consider including risk factor disclosure here to reflect how the
numerous other
companies that are focused on developing treatments for NASH could
impact the
regulatory approval process for your FXR agonists.
Risks Related to our Common Stock and this Offering, page 47
6. Provide risk factor disclosure discussing the provision in your
amended and restated
certificate of incorporation that the company has renounced any
interest or expectancy in
certain corporate opportunities.
Use of Proceeds, page 55
7. In your use of proceeds disclosure, you should disclose an estimate of
the portions of the
proceeds that will be allocated to fund research and development
activities for MET409 as
well as the expansion of your pipeline in FXR and other drug targets.
Specifically, please
disclose your estimate of how the allocated proceeds from the offering
will be used to
advance the clinical development pipeline for each target.
Management's Discussion and Analysis of FInancial Condition and Results of
Operations
Financial Operations Overview
Research and Development Expenses, page 65
8. Provide more details about the breakdown of your research and
development expenses
between MET409 and your other product candidates.
Ken Song, M.D.
FirstName LastNameKen Song, M.D.
Metacrine, Inc.
Comapany2018
August 6, NameMetacrine, Inc.
August 6, 2018 Page 3
Page 3
FirstName LastName
Contractual Obligations and Commitments, page 69
9. Provide greater detail regarding the certain clinical and regulatory
milestone payments
that you are required to make to The Salk Institute under the FXR
License Agreement.
Similarly, describe the nature of the royalty percentage that is based
upon net sales of your
products.
Critical Accounting Policies and Significant Judgments and Estimates
Stock-Based Compensation Expense , page 71
10. 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.
Company Overview, page 76
11. We note your disclosure that you have no significant product
candidates in your pipeline
other than MET409. Accordingly, you should remove the references to
the
inflammation and fibrosis "new targets" that are included in the table
depicting your
development pipeline. Research and discovery activities that precede
the identification of
a product candidate are too remote to be highlighted in the pipeline
table.
Business
Our Approach to Drug Discovery and Development
Our Solution MET409 a Non-Bile Acid FXR Agonist for the Treatment of NASH, page
79
12. With respect to your discussion of statistical significance for each
of the studies and
preclinical testings you reference, revise to include more detail
about how you determined
the data is statistically significant (e.g., the use of a p-value).
Competition, page 87
13. Consider refining your discussion here to focus on the pipeline of
various drugs being
developed with the goal of treating NASH by numerous companies.
Disclose how the
company plans to differentiate itself from other companies pursuing
treatment options.
Intellectual Property, page 88
14. We note your disclosure that you own seven patent families relating to
additional FXR
agonists. Provide more detail about these patents, including the type
of protection (e.g.,
composition of matter, use, or process).
Ken Song, M.D.
Metacrine, Inc.
August 6, 2018
Page 4
15. Clarify here that you do not own any issued patents directed to your
FXR therapeutic
research program.
Certain Relationships and Related Party Transactions, page 127
16. We note your license agreements with The Salk Institute for Biological
Studies that
require you to pay up to $6.5 million in milestone payments and a
royalty percentage on
future net sales. You state that your future capital requirements
will, at least in part,
depend on the timing of any milestone and royalty payments made to The
Salk. We
further note that each of your co-founders (who both serve on your
board of directors) are
employed by and/or serve on the board of trustees of The Salk. Provide
us with your
analysis and considerations as to why no related party disclosure is
required for the
agreements with The Salk.
General
17. Your material collaboration and license agreements should be filed as
exhibits. Refer
to Item 601(b)(10) of Regulation S-K.
18. 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.
You may contact Joseph Cascarano, Staff Accountant, at (202) 551-3376
or Robert S.
Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have questions
regarding
comments on the financial statements and related matters. Please contact Joshua
Shainess,
Attorney-Adviser, at (202) 551-7951 or Celeste M. Murphy, Legal Branch Chief,
at (202) 551-
3257 with any other questions.
FirstName LastNameKen Song, M.D. Sincerely,
Comapany NameMetacrine, Inc.
Division of
Corporation Finance
August 6, 2018 Page 4 Office of
Telecommunications
FirstName LastName