March 5, 2020
Steven J. Mento, Ph.D.
President and Chief Executive Officer
Conatus Pharmaceuticals Inc.
16745 West Bernardo Drive, Suite 250
San Diego, CA 92127
Re: Conatus Pharmaceuticals Inc.
Registration Statement on Form S-4
Filed on February 7, 2020
File No. 333-236332
Dear Dr. Mento:
We have reviewed your 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 amending your registration statement
and providing the
requested information. 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 any amendment to your registration statement and the
information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4, filed on February 7, 2020
Prospectus Summary, page 8
1. We note your disclosure on page 26 that if Conatus' net cash falls below
$12.5 million (as
adjusted based on the closing date of the merger) Histogen could decide
not to
consummate the transaction and the Merger Agreement could be terminated.
Please
include disclosure in Questions and Answers about the Merger, the
Prospectus Summary
and elsewhere as appropriate regarding this condition precedent to the
consummation of
the transaction.
The Merger, page 8
2. Please revise to briefly disclose how the estimated exchange ratio was
determined.
Steven J. Mento, Ph.D.
FirstName LastNameSteven J. Mento, Ph.D.
Conatus Pharmaceuticals Inc.
Comapany NameConatus Pharmaceuticals Inc.
March 5, 2020
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March 5, 2020 Page 2
FirstName LastName
Risk Factors
The net cash balances of Conatus and Histogen at the closing of the merger...,
page 26
3. Please clearly disclose the current levels of net cash of Conatus and
Histogen and whether
the companies anticipate net cash to be outside the range of $12.6
million to $13.4 million
for Conatus and $1.4 million and $2.2 million for Histogen, accounting
for each
company's average daily net cash burn rate, that could cause an
adjustment to the
exchange ratio. To the extent this is a possibility, please also
provide examples of
estimated percentage ownership, including the estimated percentage
ownership of each
company if Conatus were to have net cash at closing of $12.5 million,
as adjusted.
The pre-merger net operating loss carryforwards and certain other tax
attributes..., page 89
4. Please quantify the NOLs and other tax attributes that are subject to
limitation and
clarify the factors that will determine the extent of the limitation.
Forward-Looking Statements, page 92
5. Please revise the last sentence of this section to indicate that you
will update or
revise forward-looking statements to the extent required by applicable
law.
The Merger
Background of the Merger, page 97
6. Please revise to indicate what prompted Histogen management to reach
out to Conatus
management on July 15, 2019, clarifying whether the enquiry was
unsolicited, or part of
the solicitation of interest by Oppenheimer.
7. Please substantially revise this section to provide details of the
negotiations of material
terms of the transaction. Your disclosure should include separate
descriptions of any
individual meetings, including the identity of members of Conatus and
Histogen
management and board of directors involved, and the particular topics,
views, and
positions that were discussed at the meetings. Please ensure that your
disclosure addresses
each of the material aspects of the transaction, including how the
exchange ratio was
determined; the negotiation of, and reasons for, the net cash
adjustments; the discussions
of the support agreements; and negotiations of material terms of the
merger
agreement, including closing conditions, no-shop obligations and
termination rights and
fees; and the structure of the board of directors and management. In
addition, your
disclosure should provide shareholders with an understanding of why
this transaction is
being recommended as opposed to any alternatives. Please revise this
section to also
include disclosure about the material terms of initial proposals and
any subsequent
proposals relating to Parties A, B and C.
8. We note your disclosure on page 109 that Conatus' board of directors
had discussions with
members of the Special Committee in considering the factors related to
entering into the
merger. Please identify the members of the Special Committee and how
they were
Steven J. Mento, Ph.D.
FirstName LastNameSteven J. Mento, Ph.D.
Conatus Pharmaceuticals Inc.
Comapany NameConatus Pharmaceuticals Inc.
March 5, 2020
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March 5, 2020 Page 3
FirstName LastName
chosen.
9. We note your disclosure on pages 109 and 111 that both Conatus' and
Histogen's board of
directors considered the fact that the relative percentage ownership
of Conatus'
stockholders and Histogen's stockholders in the combined organization
would be fixed.
Please reconcile this disclosure with your disclosure elsewhere that
the exchange ratio and
thus the relative percentage ownership is subject to adjustment prior
to the closing of the
merger. If you mean to suggest that the exchange ratio is not subject
to adjustment based
on the market price of Conatus' common stock, please revise your
disclosure to clarify this
point.
Material Financial Analyses, page 114
10. For the selected companies analysis, selected transactions analysis
and IPO step up
analysis, please disclose the specific criteria used to select the
companies and transactions,
including whether any companies or transactions that met such criteria
were excluded
from the analyses. Please provide information on the comparability of
the companies and
transactions selected, including the development stages of the
companies, whether the
companies had any commercial products or revenues, etc.
The Merger Agreement
Merger Consideration, page 144
11. We note that you reference this section of the proxy
statement/prospectus/information
statement for a more complete description of the exchange ratio
formula. Please expand
your disclosure to provide a complete description of the exchange
ratio formula in this
section, including the adjustments that may be made to account for
each company's cash
and changes in capitalization prior to the closing of the merger.
Conatus Business
Emricasan, page 192
12. Given the decision to discontinue development of emricasan, please
revise your disclosure
throughout the prospectus to remove the description of emricasan as
being "first-in-class,"
insofar as the term suggests the the FDA will approve the product
candidate.
Histogen Business
Product Candidates, page 208
13. Please expand your description of the clinical studies conducted for
HST-001 to date to
include the number of subjects in the clinical trials, the primary and
secondary endpoints,
and any treatment-related adverse events. Please also clarify what it
means for HSC to
have demonstrated "statistically and cosmetically relevant
improvements" in total hair
count, terminal hairs and hair thickness at 12 weeks, and specifically
whether the results
were statistically significant.
Steven J. Mento, Ph.D.
FirstName LastNameSteven J. Mento, Ph.D.
Conatus Pharmaceuticals Inc.
Comapany NameConatus Pharmaceuticals Inc.
March 5, 2020
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March 5, 2020 Page 4
FirstName LastName
14. We note your statement on page 209 that Phase 1 and Phase 1/2 clinical
trials of
a predecessor to HST-001 have been completed outside the United
States, with results that
produced "significant efficacy." Please revise to eliminate any
suggestion that HST-001
has been or will ultimately be determined safe or effective, as only
the FDA and foreign
government equivalent regulators have the authority to make these
determinations. You
may provide the objective results of the clinical trials in relation
to the stated end points
and indicate whether the candidate was well tolerated.
Strategic Agreements, page 211
15. With reference to your disclosure on page 81 that several of
Histogen's programs require
the use of proprietary rights held by third parties, please expand
your disclosure to provide
information about material in-licensing agreements, if any.
Intellectual Property, page 226
16. Please revise your disclosure to specify the number of U.S. and
foreign issued patents and
patent applications Histogen has for each of its product candidates.
In addition, with
respect to the patents material to Histogen, please revise in each
instance to disclose the
type of patent protection, such as composition of matter, use, or
process, as well as the
expiration dates of such patents.
Histogen Management's Discussion and Analysis of Financial Condition and
Results of
Operations
Comparison of Nine Months Ended September 30, 2019 and 2018
Research and Development Expenses , page 245
17. Please revise to disclose a breakout of periodic research and
development expenses by
program or product candidate separately to provide more transparency
as to the type of
expenses incurred. If you do not track expense by program or product
candidate, state this
in your disclosure and disaggregate the amount by nature of expenses
or in some other
manner.
Management Following the Merger, page 256
18. For Drs. Latterich and Crean, please confirm that you have disclosed
each person's
principal occupations and employment during the past five years,
including the name and
principal business of any corporation or other organization in which
such occupations and
employment were carried on. Please also disclose for each director,
the specific
experience, qualifications, attributes or skills that led to the
conclusion that the person
should serve as a director of the company in light of the company's
business and structure.
See Item 401(e)(1) of Regulation S-K.
Steven J. Mento, Ph.D.
FirstName LastNameSteven J. Mento, Ph.D.
Conatus Pharmaceuticals Inc.
Comapany NameConatus Pharmaceuticals Inc.
March 5, 2020
March 5, 2020 Page 5
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FirstName LastName
Histogen Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
9. Revenue, page F-B-21
19. Please revise to disclose your analysis and accounting treatment here
and on page F-B-54
for the Huapont License and Supply Agreement disclosed on page 251.
General
20. We note that your forum selection provision, located in Exhibit 3.1
("Amended and
Restated Certificate of Incorporation of Conatus Pharmaceuticals") to
the filing, identifies
the Court of Chancery of the State of Delaware (or, if the Court of
Chancery of the State
of Delaware dismisses any such action for lack of subject matter
jurisdiction, another state
or federal court sitting in the State of Delaware) as the exclusive
forum for certain
litigation, including any "derivative action." Please disclose whether
this provision applies
to actions arising under the Securities Act or Exchange Act. If so,
please also state that
there is uncertainty as to whether a court would enforce such
provision. If the provision
applies to Securities Act claims, please also state that investors
cannot waive compliance
with the federal securities laws and the rules and regulations
thereunder. In that regard, we
note that Section 22 of the Securities Act creates concurrent
jurisdiction for federal and
state courts over all suits brought to enforce any duty or liability
created by the Securities
Act or the rules and regulations thereunder. If this provision does
not apply to actions
arising under the Securities Act or Exchange Act, please also ensure
that the exclusive
forum provision in the governing documents states this clearly, or
tell us how you will
inform investors in future filings that the provision does not apply
to any actions arising
under the Securities Act or Exchange Act.
21. Please provide us with copies of the materials that your financial
advisor prepared and
shared with your board in connection with this transaction, including
any board books,
transcripts and summaries of oral presentations made to the board. We
may
have additional comments after we review those materials.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
Steven J. Mento, Ph.D.
Conatus Pharmaceuticals Inc.
March 5, 2020
Page 6
You may contact Rolf Sundwall at 202-551-3105, or Kevin Kuhar at
202-551-3662, if
you have questions regarding comments on the financial statements and related
matters. Please
contact Paul Fischer at 202-551-3415, or Irene Paik at 202-551-6553, with any
other questions.
Sincerely,
FirstName LastNameSteven J. Mento, Ph.D.
Division of
Corporation Finance
Comapany NameConatus Pharmaceuticals Inc.
Office of Life
Sciences
March 5, 2020 Page 6
cc: Matt Bush, Esq.
FirstName LastName