January 3, 2020
Stephen Squinto
Interim Chief Executive Officer
Passage Bio, Inc.
Two Commerce Square
2001 Market Street, 28th Floor
Philadelphia, PA 19103
Re: Passage Bio, Inc.
Draft Registration Statement on Form S-1
Submitted December 6, 2019
CIK No. 0001787297
Dear Dr. Squinto:
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
Our pipeline, page 3
1. Please revise your Summary pipeline table to remove programs other than
those involving
your three lead product candidates. In this regard, we note that your
other programs
presently are discovery-stage and, as such, it is premature to highlight
them prominently
in your Summary.
Stephen Squinto
FirstName LastNameStephen Squinto
Passage Bio, Inc.
Comapany2020
January 3, NamePassage Bio, Inc.
Page 2
January 3, 2020 Page 2
FirstName LastName
Implications of being an emerging growth company and smaller reporting company,
page 6
2. 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.
Third parties may initiate legal proceedings..., page 43
3. Please revise your risk disclosure to further explain the statement
concerning your
awareness of potential claims regarding your AAVhu68 capsid.
Use of proceeds, page 74
4. Please revise to disclose the amount of proceeds that you intend to
allocate toward the
development of each lead product candidate and also disclose the
trials (e.g., Phase 1/2)
that you intend to fund with the proceeds.
Capitalization, page 76
5. We note on pages F-8, F-15, F-24 and F-31 that all of your outstanding
preferred shares
will convert automatically into common stock in the event of a
"Qualified IPO". Please
revise your disclosures to clarify all of the stipulations of a
"Qualified IPO" and explain
why you believe that it is factually supportable that the outstanding
preferred shares will
automatically convert into common stock.
Share-based compensation, page 94
6. You disclose that your board of directors determined the estimated
fair value of common
stock for certain awards utilizing valuations prepared by an
independent third-party.
However, on page 96 you disclose "third-party valuations resulted in
valuations of our
common stock of $0.23, $0.36 and $1.82 per share as of January 15,
2019, May 8, 2019
and August 27, 2019, respectively, and were used for the purposes of
determining the
share-based compensation expense." While you have no requirement to
make reference to
a third party expert simply because you used or relied on the third
party expert's
valuation, this disclosure appears to be a statement of the third
party expert and attributes
the figures to the expert. This would appear to require compliance
with Securities Act
Rule 436, including naming the expert and including their consent.
Please advise. Refer
also to Securities Act Section 11(a) and C&DI Question 141.02.
7. We may have additional comments on your accounting for equity
issuances. Once you
have an estimated offering price, please provide us an analysis
explaining the reasons for
the differences between recent valuations of your common stock leading
up to your
offering and the estimated offering price.
Stephen Squinto
FirstName LastNameStephen Squinto
Passage Bio, Inc.
Comapany2020
January 3, NamePassage Bio, Inc.
January 3, 2020 Page 3
Page 3
FirstName LastName
Program selection, page 121
8. We refer to your disclosure at the top of page 122 concerning
preclinical validation in a
mouse model of Krabbe disease. Please revise to present the study data
that supports each
of the statements in this section. In this regard, your disclosure on
pages 122-123
concerning the two mouse studies does not appear to address motor
function or show how
it was improved. Similarly it is not clear that either of these
studies showed
improved CSF delivery in mice that corrected peripheral nerve
demyelination and globoid
cell infiltration.
License agreement
University of Pennsylvania, page 130
9. We note your disclosure that the agreement will expire on a licensed
product-by-licensed
product and country-by-country basis upon the later of (i) the
expiration of the last valid
claim of the licensed patent rights that covers the exploitation of
such licensed product in
such country, (ii) ten years after first commercial sale of such
licensed product in such
country, and (iii) expiration of the data exclusivity term conferred
by the applicable
regulatory authority in such country for such licensed product. If
this is also when the
royalty term will expire, please make that clear in this section or
revise your disclosure to
state when the royalty term expires.
Intellectual property, page 132
10. With respect to your patent family with a pending PCT international
application and one
pending foreign application, please disclose the foreign jurisdiction
and what jurisdictions
the PCT international application covers.
Note 3. Summary of significant accounting policies
Share-based compensation, page F-23
11. We note your disclosures starting on page F-25 that you issued shares
in exchange for
nonrecourse notes and that you account for these transactions as the
grant of a stock
option whereby you do not record the nonrecourse notes on your balance
sheet. Please
tell us and revise your filing to explain in more detail the nature of
why you do not record
nonrecourse notes in exchange for your shares issued on the balance
sheet. Cite the
accounting literature utilized and how you applied it to your
situation.
Stephen Squinto
FirstName LastNameStephen Squinto
Passage Bio, Inc.
January 3, NamePassage Bio, Inc.
Comapany2020
Page 4
January 3, 2020 Page 4
FirstName LastName
You may contact Tara Harkins at (202) 551-3639 or Terence O'Brien,
Accounting
Branch Chief, at (202) 551-3355 if you have questions regarding comments on the
financial
statements and related matters. Please contact Ada Sarmento at (202) 551-3798
or Joseph
McCann at (202) 551-6262 with any other questions.
Sincerely,
Division of
Corporation Finance
Office of Life
Sciences