October 23, 2018
Alison Lawton
Chief Executive Officer
Kaleido Biosciences, Inc.
65 Hayden Avenue
Lexington, MA 02421
Re: Kaleido Biosciences, Inc.
Draft Registration Statement on Form S-1
Submitted September 25, 2018
CIK No. 0001751299
Dear Ms. Lawton:
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 September 25, 2018
Prospectus Summary
Overview, page 1
1. Please remove the statement that you are a "clinical-stage healthcare
company" as this
suggests to investors that you have an active IND and are conducting
clinical trials as part
of the FDA's drug approval pathway. In addition, please balance your
summary
disclosure to clearly state upfront that you have not conducted any
therapeutic clinical
trials for any of your product candidates. Please also balance your
references to human
clinical studies by clearly stating that you have not yet submitted INDs
to conduct
Alison Lawton
FirstName LastNameAlison Lawton
Kaleido Biosciences, Inc.
Comapany NameKaleido Biosciences, Inc.
October 23, 2018
October 23, 2018 Page 2
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FirstName LastName
therapeutic clinical trials and that you are conducting these studies
assuming the product
candidates are food or medical food. In addition, in each instance
that you refer to human
clinical trials or human dosing, please specify that these are
non-therapeutic human
clinical trials or non-therapeutic human dosing.
2. Please define at first use the term "targeted glycans."
3. Please tell us why you believe it is appropriate to label your
platform as "human-centric,"
including what is meant by that term. Please also explain why you
believe your MMTs
have "tremendous potential" and why you have "world-class
capabilities" in
computational biology. In the alternative, please delete these terms.
4. We note that you have neither initiated ex vivo testing for nor
identified an MMT
candidate for your chronic kidney disease, atherosclerotic
cardiovascular disease, drug or
disease-induced diarrhea and organic acidemias programs. Given this,
please explain why
you believe these programs are sufficiently material to include in the
pipeline chart. Please
also revise your prospectus summary to clearly explain that you have
not yet identified
MMT candidates for multi-drug resistant bacteremia in high risk
patients, chronic kidney
disease, atherosclerotic cardiovascular disease, drug or
disease-induced diarrhea and
organic acidemias. Please also tell us why the table indicates that ex
vivo testing and
human clinical studies are ongoing for drug or disease-induced
diarrhea.
5. Please revise your product pipeline charts on page 3 and 112 to
lengthen the Planned
Phase 2 and Planned Phase 3 columns to the extent you plan to develop
your MMT
candidates as drug products. Your current presentation suggests that
you will have
completed the majority of the development process for your candidates
by the time you
file an IND.
6. Please clearly state here and in your Business section how you will
determine which
product candidates you will select for drug development versus
non-drug development,
including the potential impact to your company if you can pursue only
the non-drug
development pathway. Please also clearly disclose that in both the
United States and
European Union, no products to date have been approved specifically
demonstrating an
impact on the microbiome as part of their therapeutic effect.
7. Please remove the statements throughout your prospectus that you are
able to measure or
assess safety in your human clinical studies or that you can assess
the therapeutic viability
of your MMT candidates. We note that your current business plan
involves pursuing FDA
approval of your product candidates, therefore these statements
suggest that your product
candidates are safe for use as a drug and imply that you are able to
assess efficacy in non-
IND clinical trials. Safety and efficacy are assessed throughout all
stages of clinical trials
and the determinations are within the sole authority of the FDA or
comparable foreign
regulatory entity. Please also clearly state in your definition of
"Human clinical studies"
on page 1 that your determination that your initial product candidate
is safe for human
clinical studies applies only in the context of food and is irrelevant
for determining
Alison Lawton
FirstName LastNameAlison Lawton
Kaleido Biosciences, Inc.
Comapany NameKaleido Biosciences, Inc.
October 23, 2018
October 23, 2018 Page 3
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FirstName LastName
whether the FDA determines that your product candidate is safe for use
as a drug. Please
also clearly identify the related GRAS class of compounds that you are
using to determine
that your product candidates are generally recognized as safe.
8. We note that you refer to your MMTs as "novel treatments" and you
state throughout that
your programs will be used for "treatment" of certain conditions, such
as
hyperammonemia. Please revise such statements throughout your
prospectus to clarify
that your product candidates will have to be approved pursuant to the
FDA's drug
approval pathway for you to make any claim that your product
candidates can cure,
mitigate, prevent or treat such conditions.
9. Please tell us why you believe you will be able to move directly into
a Phase 2 clinical
trial under an IND for each of your product candidates, including the
basis for your belief
that the FDA will accept the results of your non-therapeutic clinical
trials in lieu of a
Phase I trial conducted under an IND.
10. You state that you have conducted seven human clinical studies with
your MMT
candidates. However, we note that you discuss only two human clinical
studies in your
Business section. Please advise.
Our Strategy, page 5
11. We note your disclosure that you are conducting human clinical studies
based on
discussions with regulatory authorities. Please describe, where
appropriate, each of the
discussions you have had with the FDA and foreign regulatory
equivalents regarding your
product candidates and/or the pursuit of this regulatory pathway.
12. Please put into context your statement regarding your "rapid and
cost-effective
development approach" to advance your pipeline, "including conducting
human clinical
studies and planned clinical trials as appropriate based on data and
discussions with
regulatory authorities." In this regard, we note your risk factor
disclosure on pages 18-20
which indicates that the drug development process is uncertain,
lengthy, and expensive.
Please also reconcile your belief that you may rapidly advance your
pipeline with your
statement on page 18 that the regulatory approval process for
microbiome product
candidates may be more expensive and take longer than the approval
process for product
candidates based on better known or more extensively studied
technologies.
Risks associated with our business, page 6
13. Please disclose with prominence equal to the discussion of your
strengths the risks that the
FDA may require additional preclinical trials before allowing you to
proceed to clinical
trials, the FDA may determine that your product candidates cannot be
marketed as
conventional foods or medical foods, and that the FDA may disagree
with your
determination that your products involve GRAS ingredients.
Alison Lawton
FirstName LastNameAlison Lawton
Kaleido Biosciences, Inc.
Comapany NameKaleido Biosciences, Inc.
October 23, 2018
October 23, 2018 Page 4
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FirstName LastName
Implications of Being an Emerging Growth Company, page 7
14. 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.
Use of Proceeds, page 84
15. We note that you intend to use the net proceeds, together with
existing cash and cash
equivalents, to advance your programs in hyperammonemia through Phase
2 clinical trials
and to advance your pipeline outside of hyperammonemia. Please revise
your disclosure
to specify whether you will be able to complete the Phase 2 clinical
trials for your
hyperammonemia programs and to disclose how far in the development of
your other
pipeline product candidates you expect to reach using proceeds from
the offering. If any
material amounts of other funds are necessary to accomplish the
specified purposes for
which the proceeds are to be obtained, state the amounts and sources
of such other funds
needed for each such specified purpose and the sources thereof. Refer
to Instruction 3 to
Item 504 of Regulation S-K.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Critical Accounting Policies and Significant Judgments and Estimates
Stock-Based Compensation
Determination of the Fair Value of Common Stock, page 106
16. 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.
Business, page 111
17. We note your disclosure on page F-29 regarding the Midori License
Agreement. Please
tell us whether you licensed the technology underlying your product
platform or lead
product candidates through this agreement. If so, please disclose the
material terms of the
agreement, including the intellectual property and technology
licensed, rights and
obligations of the parties and termination provision. In addition,
please file the agreement
as an exhibit to the registration statement, or tell us why you do not
believe this is
required. See Item 601(b)(10) of Regulation S-K.
Alison Lawton
FirstName LastNameAlison Lawton
Kaleido Biosciences, Inc.
Comapany NameKaleido Biosciences, Inc.
October 23, 2018
October 23, 2018 Page 5
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FirstName LastName
Our Microbiome Metabolic Therapies (MMTs), page 117
18. Please supplementally tell us the specific observations supporting
your statement that your
MMT candidates have been observed to have limited systemic exposure.
Ex Vivo Screening in Healthy Voluneer Microbiome Samples, page 119
19. We note that you collaborate with a third party to generate certain
metabolic data. Please
tell us if you have any agreement, whether written or oral, with such
party. If so, please
identify the party, disclose the material terms of the agreement and
file the agreement as
an exhibit to the registration statement. In the alternative, tell us
why you believe you are
not required to file this agreement.
Rapid Advancement into Human Clinical Studies, page 120
20. We note your disclosure that for the use of a substance to be GRAS,
the scientific data and
information about its use must be widely known, and there must be a
consensus among
qualified experts that this data and information establish that the
substance is safe under
the conditions of its intended use. We also note your disclosure that
you rely on qualified
experts from scientific consulting organizations that are highly
experienced in conducting
GRAS evaluations to conduct initial safety assessments of your MMT
candidates. Please
expand your disclosure to identify the substance that is considered to
be GRAS, the
relation of your product candidate to this substance, and to describe
the scientific data
indicating that the substance used in your product candidates are GRAS
and the initial
safety assessments that were conducted of your MMT candidates.
21. We note your disclosure on page 122 that the human clinical studies
will allow you to
decide whether to continue to develop a specific MMT candidate for
non-drug
applications or instead to file an IND and investigate it for drug
applications. Please
revise your disclosure throughout the prospectus to clarify whether
you intend to develop
MMT candidates for non-drug applications if the human clinical studies
do not result in
desired outcomes, and if so, the process by which you will bring the
product to market and
the competition you will face. Please also explain the reasons you
plan to pursue drug
approval for these MMT candidates if you have the ability to market it
as a food or
medical food product.
Clinical Development , page 128
22. We note on page 147 your explanation that an IND is not required for
human testing of
GRAS substances unless the study is intended to evaluate the product's
ability to diagnose,
cure, mitigate, treat or prevent a disease or condition. Given that
you have selected
KB195 the treatment of hyperammonemia, and the objectives of your
completed clinical
trial and planned human clinical trial in UCD patients is to evaluate
the effects of KB195
on microbiome nitrogen metabolism, please explain why you believe an
IND is not
required for these studies.
Alison Lawton
FirstName LastNameAlison Lawton
Kaleido Biosciences, Inc.
Comapany NameKaleido Biosciences, Inc.
October 23, 2018
October 23, 2018 Page 6
Page 6
FirstName LastName
Drug or Disease-Induced Diarrhea, page 139
23. We note that your pipeline tables on pages 3 and 112 indicate that you
have completed ex
vivo screening for drug or disease-induced diarrhea. Please provide
disclosure regarding
the results of your ex vivo screening for this indication or revise
your table so that it is
consistent with your disclosure.
Future Pipeline Opportunities, page 139
24. We note your disclosure on page 140 that you are currently conducting
a human clinical
study in Type 2 diabetes, initially with a proprietary formulation of
commercially-
available ingredients and that you intend to introduce your own MMT
candidate in the
final stage of the study in the second half of 2019. Please expand
your disclosure to
provide additional information about this study, including a
description of the proprietary
formulation of commercially-available ingredients that you are testing
in patients, its
mechanism of action, and how the introduction of your MMT candidate
fits into the
study. Please also disclose whether you have identified the MMT
candidate to be
introduced into the study, and if so, discuss the results of ex vivo
screening and testing of
the MMT candidate, and tell us why you do not include this MMT
candidate in your
pipeline table In addition, we note that pursuant to FDA guidance
diabetes is not a
condition for which medical food can be labeled or marketed. Please
tell us whether you
are conducting these studies pursuant to regulations supporting
research with food or
medical food, and how you intend to develop and market your potential
MMT candidate
given the FDA's position.
Manufacturing, page 140
25. We note your disclosure on page 66 that in 2018, you entered into a
services agreement
with a third party to handle the manufacturing supply chain from drug
substance synthesis
through labeling and packaging for your planned clinical trials and
that you may not be
able to locate alternative suppliers. Please disclose the material
terms of this agreement
and file it as an exhibit to the registration statement, or tell us
why you do not believe this
is required. See Item 601(b)(10) of Regulation S-K.
Expedited Development and Review Programs for Drugs , page 150
26. We note your disclosure on page 131 that you may be able to seek
designation of KB195
for the treatment of a Rare Pediatric Disease. Please revise your
disclosure in this section
to explain the conditions for and the impact of receiving a Rare
Pediatric Disease Priority
Review Voucher.
Description of Capital Stock, page 190
27. We note that your forum selection provision identifies the Court of
Chancery of the State
of Delaware as the exclusive forum for certain litigation, including
any "derivative
Alison Lawton
Kaleido Biosciences, Inc.
October 23, 2018
Page 7
action." Please disclose whether this provision applies to actions
arising under the federal
securities laws. Also ensure that the exclusive forum provision in your
proposed
organizational documents states this clearly. In this regard, we note
that Section 27 of the
Exchange Act creates exclusive federal jurisdiction over all suits
brought to enforce any
duty or liability created by the Exchange Act or the rules and
regulations thereunder.
Exhibits
28. Please file as an exhibit to the registration statement the services
agreement with Flagship
Management, or tell us why you do not believe it is required to be
filed. See Item
601(b)(10) of Regulation S-K.
General
29. Please provide us proofs of all graphics, visual, or photographic
information you will
provide in the printed prospectus prior to its use, for example in a
preliminary prospectus.
You may contact Keira Nakada at 202-551-3659 or Jim Rosenberg at
202-551-3679 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Irene Paik at 202-551-6553 or Erin Jaskot at 202-551-3442 with any
other questions.
Sincerely,
FirstName LastNameAlison Lawton
Division of
Corporation Finance
Comapany NameKaleido Biosciences, Inc.
Office of
Healthcare & Insurance
October 23, 2018 Page 7
cc: Kingsley L. Taft - Goodwin Procter LLP
FirstName LastName