United States securities and exchange commission logo
March 15, 2022
Chamath Palihapitiya
Chief Executive Officer
Social Capital Suvretta Holdings Corp. I
2850 W. Horizon Ridge Parkway, Suite 200
Henderson, NV 89052
Re: Social Capital
Suvretta Holdings Corp. I
Registration
Statement on Form S-4
Filed February 14,
2022
File No. 333-262706
Dear Mr. Palihapitiya:
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.
Form S-4 filed February 14, 2022
Cover Page
1. Please revise the
prospectus cover page to disclose the expected ownership percentages in
the combined company of
SCS s public stockholders, the Sponsor, the PIPE Investors and
Akili s stockholders.
2. We note your disclosure
on the prospectus cover page that SCS intends to apply for the
listing its shares on
the Nasdaq Capital Market to be effective at the time of the Business
Combination, which is
also a closing condition of the Business Combination. Please
disclose, where
appropriate, when you will file the initial listing application for the
combined company and
whether Nasdaq s determination will be known at the time that
stockholders are asked
to vote on the merger agreement.
Chamath Palihapitiya
FirstName LastNameChamath Palihapitiya
Social Capital Suvretta Holdings Corp. I
Comapany
March NameSocial Capital Suvretta Holdings Corp. I
15, 2022
March2 15, 2022 Page 2
Page
FirstName LastName
Cautionary Statement Regarding Forward-Looking Statements, page viii
3. We note your statements on pages viii, x and 137 cautioning investors
not to place undue
reliance on prospective financial information included in the
prospectus. Please revise this
statement to eliminate any implication that investors are not entitled
to rely on the
information included in the registration statement.
Questions and Answers for Shareholders of SCS, page xi
4. Please expand footnote 2 to the table presented on page xv to clarify
that 2,060,000 of the
56,137,514 shares expected to be issued to existing Akili common and
preferred holders
would be acquired in the PIPE Investment rather than as part of the
consideration.
Address this comment in similar disclosures provided throughout the
Form S-4.
5. Please revise your disclosure, where applicable, to show the potential
impact of
redemptions on the per share value of the shares owned by
non-redeeming shareholders by
including a sensitivity analysis showing a range of redemption
scenarios, including
minimum, maximum and interim redemption levels.
Summary, page 1
6. Please balance your disclosure with equally prominent disclosure of
the limitations of
your platform and challenges you face in implementing your business
strategy and gaining
market acceptance. As examples only, discuss competition from
biotechnology companies
and companies developing non-regulated products, as referenced on page
41, and that
EndeavorRx should be viewed a part of a therapeutic program that may
supplement
medication, clinician-directed therapy and/or educational programs, as
referenced on page
228.
7. We note your disclosure on page 2 and elsewhere in the prospectus that
Akili was granted
marketing authorization from the FDA in June 2020 pursuant to a de
novo classification,
in addition to receiving the CE Mark certification in EEA member
countries. We also
refer to your disclosure on pages 252 that each product candidate you
seek to
commercially distribute in the U.S. will require either a prior de
novo classification grant,
510(k) clearance or a PMA from the FDA. Please expand your disclosure
in the Summary
and throughout the prospectus to briefly discuss the FDA s
classification of EndeavorRx
as a medical device into one of three classes (Class I, Class II and
Class III) depending on
its level of risk.
Our Development Pipeline, page 3
8. Please revise your pipeline table here and on page 226 to include the
name of your
product candidates and/or programs. For example, we note your
reference to the
EndeavorRx program as AKL-T01 on page 231. We also refer to your
reference on page
245 to AKL-T02, which is not identified in your pipeline table or
defined elsewhere in the
prospectus. Please clarify and revise your disclosure accordingly.
Chamath Palihapitiya
FirstName LastNameChamath Palihapitiya
Social Capital Suvretta Holdings Corp. I
Comapany
March NameSocial Capital Suvretta Holdings Corp. I
15, 2022
March3 15, 2022 Page 3
Page
FirstName LastName
9. Please tell us the basis for characterizing certain programs as in the
"pivotal" development
stage. Additionally, we refer to the last two rows in your pipeline
table under the headings
BBT and SNAV. Given the status of development and limited
disclosure on page 226
of such programs, it seems premature to highlight these programs
prominently in your
Summary pipeline table. If they are material, please expand your
disclosure in this section
and on page 226 to provide a more fulsome discussion of these
programs. Alternatively,
please remove any programs that are not currently material from your
pipeline table. We
also note that Shionogi is responsible for the clinical development
and commercialization
of EndeavorRx and AKL-T02 in Japan and Taiwan and as such you do not
control the
related commercial development. Please revise your presentation to
reflect this
arrangement in your pipeline table. Please also enlarge your pipeline
table on pages 3, 226
and 243 to ensure all text is legible.
Interests of SCS's Directors and Executive Officers in the Business
Combination, page 15
10. Please revise to quantify the aggregate amount of out-of-pocket
expenses for which SCS s
officers and directors and their affiliates are entitled to be
reimbursed, including any
working capital loans.
11. We note your disclosure here and elsewhere throughout the prospectus
that the Sponsor
and each director and officer of SCS have agreed to waive their
redemption rights. Please
describe any consideration provided in exchange for this agreement.
Please also revise
your disclosure summarizing the background of the business combination
to discuss the
negotiation of this agreement.
Selected Unaudited Pro Forma Condensed Combined Financial Information, page 28
12. Please revise the presentation of net loss attributable to common
stockholders, basic and
diluted under the maximum redemptions scenario to include parenthesis
to provide a
consistent presentation.
We face competition, and new products may emerge..., page 40
13. We note your disclosure relating to your competitors developing ADHD
treatments, as
well as non-regulated digital health products. Please disclose whether
any of your
biotechnology competitors are also pursuing digital and/or video games
for ADHD
treatment, and if so, where they are in the development process.
Please also disclose if
there are any non-regulated products that do not require prescriptions
in the digital health
space for the treatment of ADHD that offer digital and/or video games
on app stores in the
United States and/or in Europe.
Risks Related to the Business Combination and SCS, page 76
14. Please disclose the material risks, where appropriate, to unaffiliated
investors presented by
taking the company public through a merger rather than an underwritten
offering. These
risks could include the absence of due diligence conducted by an
underwriter that would
Chamath Palihapitiya
FirstName LastNameChamath Palihapitiya
Social Capital Suvretta Holdings Corp. I
Comapany
March NameSocial Capital Suvretta Holdings Corp. I
15, 2022
March4 15, 2022 Page 4
Page
FirstName LastName
be subject to liability for any material misstatements or omissions in
a registration
statement.
15. We note that the audit opinion for SCS includes a paragraph related to
substantial doubt
about the ability of SCS to continue as a going concern. Please revise
to provide
prominent disclosure in the Summary and Risk Factors section.
Since the Sponsor and SCS's directors and executive officers have interests
that are different...,
page 77
16. Please revise to highlight the risk that the Sponsor and SCS s
directors and executive
directors will benefit from the completion of a business combination
and may be
incentivized to complete an acquisition of a less favorable target
company or on terms less
favorable to shareholders rather than liquidate. Please also clarify
if the sponsor and its
affiliates can earn a positive rate of return on their investment,
even if other SPAC
shareholders experience a negative rate of return in the post-business
combination
company.
The provisions of the Proposed Bylaws requiring exclusive forum in the Court of
Chancery of
the State of Delaware...., page 89
17. We note your disclosure that the Court of Chancery of the State of
Delaware (or, in the
event that such court does not have jurisdiction, the federal district
court for the District of
Delaware or other state courts of the State of Delaware) shall be the
exclusive forum for
certain claims, including any derivative action. Please disclose
whether this provision
applies to actions arising under the Exchange Act. If this provision
does not apply to
actions arising under the Exchange Act, please also ensure that the
exclusive forum
provision in the governing documents states this clearly. We note your
disclosure that the
federal district courts of the United States shall be the exclusive
forum for claims arising
under the Securities Act of 1933. Please also disclose that investors
cannot waive
compliance with the federal securities laws and the rules and
regulations thereunder. In
this regard, we note that Section 22 of the Securities Act creates
concurrent jurisdiction
for federal and state courts over all suits to enforce any duty or
liability created by the
Securities Act or the rules and regulations thereunder.
Background to the Business Combination, page 123
18. We note your disclosure on page 123 that SCS s management team
entered into non-
disclosure agreements with thirty one central nervous system-focused
potential business
combination targets, including Akili. Please expand your disclosure of
the other potential
business combination targets the SCS Board considered, including but
not limited to
whether the SCS s management team delivered letters of intent to any
of the other targets,
and discuss the Board s analysis in reaching its conclusion not to
pursue such other
potential business combination targets.
Chamath Palihapitiya
FirstName LastNameChamath Palihapitiya
Social Capital Suvretta Holdings Corp. I
Comapany
March NameSocial Capital Suvretta Holdings Corp. I
15, 2022
March5 15, 2022 Page 5
Page
FirstName LastName
19. Please revise your disclosure in this section to describe how SCS
Board arrived at a
valuation of $800 million for Akili. Please address in your revisions
the methodology
employed in reaching the valuation, including the underlying
assumptions and conclusions
of the SCS Board. For example, please advise if valuations of
comparable public
companies were considered by the SCS Board, and if so, please disclose
the selection
criteria for companies considered comparable. Additionally, we note
your disclosure on
page 130 that the SCS management proposed a downward revision to the
valuation of
Akili in the range of $600 to 700 million following an update
regarding detailed diligence
that had been conducted on Akili s business over the prior two
months. Please expand
your discussion of how the analysis and valuation of Akili evolved
during the
negotiations.
20. Please revise your disclosure to discuss who selected the PIPE
Investors and what
relationship the investors have with any of the transaction parties,
if any.
SCS Board of Directors Reasons for the Business Combination, page 132
21. We note the disclosure on page 137 that Akili "previously" provided
SCS with its
internally prepared forecast of revenue potential in the United
States. Please revise to
explain whether the Board considered Akili s prospective financial
information as part of
its due diligence of Akili s business and if so, how the Board used
any projections
provided. Please also clarify when the projections were provided.
Where to you discuss
prospective financial information on page 137, revise to explain the
specific assumptions
used to generate the revenue forecast and risks related to such
assumptions.
U.S. Federal Income Tax Considerations, page 176
22. Please revise to include a tax opinion covering the material tax
consequences of the
domestication and redemption. With reference to your disclosure on
page 180 concerning
your likely status as a PFIC, please revise so that the
disclosure/opinion concerning the tax
consequences of the domestication is not subject to the PFIC rules
which are discussed
elsewhere in the prospectus. For guidance concerning assumptions and
opinions subject
to uncertainty, please refer to Staff Legal Bulletin No. 19. Revise
the Q&A and Summary
sections accordingly. Please also revise to remove language stating
that generally
certain tax consequences will apply or assuming certain consequences.
Unaudited Pro Forma Condensed Combined Financial Information
Description of the Transactions, page 187
23. For the Earnout Shares, we note your reference to employees holding
options as Earnout
Service Providers. Please clarify your disclosures as to whether the
Earnout Service
Providers also include employee shareholders. If not, please revise
your disclosures here
and within Note 6 to include your accounting for Earnout Shares
allocated to employee
stockholders. Also disclose the accounting for the Earnout Shares
allocated to the
warrantholders. Finally, clarify whether the Earnout Shares subject to
forfeiture by the
Chamath Palihapitiya
FirstName LastNameChamath Palihapitiya
Social Capital Suvretta Holdings Corp. I
Comapany
March NameSocial Capital Suvretta Holdings Corp. I
15, 2022
March6 15, 2022 Page 6
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FirstName LastName
Earnout Service Providers are reallocated to the entire pool, the
selling shareholders, or
the optionholders.
24. Please expand the PIPE Financing description to clarify that of the
16.2 million shares
subscribed, 13.54 million shares have been subscribed to the Sponsor
and related parties
and 2.06 million shares have been subscribed by existing Akili
stockholders, as related
party transactions.
25. We note your disclosure that each share of Akili common stock and
preferred stock will
be converted into a right to receive shares of Akili, Inc. common
stock. This statement
appears inconsistent with the business combination description in the
other sections of the
Form S-4, which indicate that the Akili preferred stock will first
convert into shares of
Akili common stock. Please revise your disclosures to address this
inconsistency. To the
extent that any of the series of preferred stock shares do not convert
into shares of
common stock consistent with the disclosures on page F-78, disclose
the impact of any
changes to the conversion rates. Otherwise, please reconcile how you
determined
54,077,514 shares of Akili, Inc. common stock will be allocated to the
current
shareholders of Akili s common and preferred stocks.
26. Please reconcile the number of unexercised vested stock options,
unvested stock options
and warrants with your disclosures on pages F-76 and F-78. Further,
reconcile this
disclosure with allocation of 5,922,486 shares of Akili, Inc. common
stock for these
instruments that represents a conversion rate of 1.16 and clarify if
this conversion rate is
consistent with the conversion rate for the outstanding Akili shares
of common stock prior
to conversion into Akili, Inc. shares of common stock. Finally,
address the accounting
impacts to the options (vested and unvested) and warrants with the
change in the exercise
price and either the modification of the terms to require net
settlement or in the number of
shares of Akili, Inc. common stock the options and warrants are
exercisable into.
27. Please expand note (c) to clarify what the 1,668,735 of unissued
options of Akili
represents.
Unaudited Pro Forma Condensed Combined Balance Sheet, page 190
28. Please revise the pro forma total stockholders equity (deficit)
under scenario 2 to reflect
equity rather than a deficit.
5. Adjustments to Unaudited Pro Forma Condensed Statement of Operations for the
Year Ended
December 31, 2020, page 197
29. Please expand notes a and b to address the following:
Clarify the accounting for the Earnout Shares issuable to clarify
if the awards
represent a modification to the options or a new award and provide
us with the facts
and circumstances along with specific references to the accounting
literature that
supports your intended accounting.
Disclose the method used to estimate the total expense and the
material assumptions
Chamath Palihapitiya
FirstName LastNameChamath Palihapitiya
Social Capital Suvretta Holdings Corp. I
Comapany
March NameSocial Capital Suvretta Holdings Corp. I
15, 2022
March7 15, 2022 Page 7
Page
FirstName LastName
and estimates used, including the estimated number of these
shares and the facts and
circumstances that lead management to conclude that the market
conditions will be
met within approximately 13 months.
6. Earnout Shares, page 197
30. We note from your disclosure on page 188 that you have preliminarily
concluded that the
Earnout Shares awarded to non-employee stockholders will be classified
as liabilities.
Please expand your disclosure to provide the terms of the award that
have led you to
preliminarily conclude that liability accounting has been triggered.
Also disclose the facts
and circumstances that could result in a change in accounting to
equity classification.
31. Please disclose the number of Earnout Shares estimated to be awarded
to non-employee
shareholders that is the basis for estimating the liability amount.
Also, disclose the
expected volatility used in the Monte Carlo simulation valuation
model.
Information about Akili, page 213
32. Please clarify the meaning of scientific or technical terms the first
time they are used in
this section in order to ensure that lay readers will understand the
disclosure. For
example, please briefly explain what you mean by
electroencephalographic, frontal theta
activity, neurodiverse, neurotypical and amyloid positive or negative
status.
ADHD market size, page 227
33. We note your disclosure on page 228 that your EndeavorRx should be
considered as part
of a therapeutic program that may also include clinician-directed
therapy, medication
and/or educational programs, rather than as a substitute for
medications for ADHD. We
also refer to your disclosure on pages 218 and 227 that $10 billion is
spent with over 70
million prescriptions written every year for the treatment of ADHD in
the United States,
88% of which comprises of stimulants at a value of $8 billion. Please
also describe the
market for non-medication treatments and therapies for the treatment
of ADHD.
Clinical evidence supporting EndeavorRx, page 228
34. We refer to your disclosure relating to your STARS-ADHD pivotal study.
Please expand
your disclosure of the scope and design of the trial, including the
age range of the
participants and the length of the study. You disclose on page 229
that the children using
EndeavorRx showed statistically significant improvement across all
measures, yet also
note that there was no statistically significant separation on the
mean magnitude of effect
between EndeavorRx and the control. Please expand your disclosure to
discuss the
significance of your conclusion relating to the mean magnitude of
effect. Please also
enlarge the graphics on pages 229 and 230 through 236 to ensure all
text is legible.
35. We refer to your disclosure that there were no serious adverse events
observed in the
STARS-ADHD Adjunctive clinical study and the most common
treatment-related adverse
Chamath Palihapitiya
FirstName LastNameChamath Palihapitiya
Social Capital Suvretta Holdings Corp. I
Comapany
March NameSocial Capital Suvretta Holdings Corp. I
15, 2022
March8 15, 2022 Page 8
Page
FirstName LastName
event reported was frustration. Please revise to disclose the number
of participants who
experienced this treatment-related adverse event. With respect to your
ADHD proof of
concept study in pediatric ADHD, please clarify when the study was
conducted and the
primary endpoint and expand your discussion of the data from the
study.
36. For each study discussed in this section starting on page 230,
including but not limited to
your studies relating to sensory processing disorder,
electroencephalography, autism
spectrum disorder, multiple sclerosis, acute cognitive function, and
cancer-related
cognatic dysfunction, please revise to clarify whether each study was
powered for
statistical significance, discuss the p-values and statistical
significance, identify the
primary and secondary endpoints, when each study was conducted and the
length of each
study, the age range of participants and whether any adverse events
were observed, as
applicable.
Cognitive Assessment, page 238
37. We refer to your disclosure on page 239 relating to the pilot study
you conducted in
collaboration with Pfizer to use your SSME therapeutic engine for
assessment purposes.
We also note the reference to Pfizer in the third to last row of your
pipeline table. Please
revise to clarify the terms of this collaboration and tell us why you
believe it is appropriate
to include Pfizer in the pipeline table. If you have entered into a
collaboration agreement
with Pfizer, please provide a brief description of the material terms
of the agreement,
where appropriate, and file the agreement as an exhibit to the
registration statement or
explain to us why you believe you are not required to do so.
Similarly, describe the terms
of your collaboration with research teams at Weil Cornell Medicine,
New York-
Presbyterian Hospital and Vanderbilt University Medical Center, as
referenced on page
237, file any related agreements as exhibits and tell us why you
believe it is appropriate to
reference these institutions in your pipeline table. Refer to Item
601(b)(10) of Regulation
S-K.
Intellectual Property, page 243
38. We note your disclosure on page 244 that you have additional utility
patent applications
pending worldwide in each patent family. Please expand your disclosure
with respect to
your pending patent applications in each patent family, including the
number of patent
applications, the products to which they relate, the applicable
jurisdiction and
anticipated expiration dates. Please also clarify, if true, that Akili
owns the patent families
in the third through eighth bullet points on page 244. With respect to
your design patent
families, please specify the products to which such patents relate,
the applicable
jurisdictions and patent expiration dates.
Agreements/Third Parties, page 245
39. Please expand your disclosure of your collaboration with Shionogi to
specify the
aggregate amounts received to date under the agreement. Please also
disclose the royalty
Chamath Palihapitiya
FirstName LastNameChamath Palihapitiya
Social Capital Suvretta Holdings Corp. I
Comapany
March NameSocial Capital Suvretta Holdings Corp. I
15, 2022
March9 15, 2022 Page 9
Page
FirstName LastName
term and the royalty rate or range that does not exceed ten percentage
points per tier, as
applicable.
40. We note your disclosure on page 48 of your reliance on a single third
party digital
pharmacy, Phil, for the fulfillment of prescriptions for EndeavorRx.
Please advise if there
is an agreement in place with Phil, and if so, please provide a brief
description of the
material terms of such arrangement and file such agreement as an
exhibit to the
registration statement or explain to us why you believe you are not
required to do so.
Refer to Item 601(b)(10) of Regulation S-K.
41. We refer to your disclosure on pages 246 and 247 relating to the UCSF
NeuroRacer
Agreement and the UCSF BBT Agreement. For each license agreement,
please disclose
when the last-to-expire patent is scheduled to expire and specify the
aggregate amounts
paid to date under each agreement. With respect to the TALi Agreement,
please disclose
the royalty term, aggregate amounts paid to date (including any
upfront or execution fee)
and expand your disclosure of the time period by which certain sales
milestones must be
met and the amount of fees to be paid to avoid termination of the
agreement. Please also
file the UCSF NeuroRacer Agreement, the UCSF BBT Agreement and the
TALi
Agreement as exhibits to the registration statement or explain to us
why you believe you
are not required to do so. Refer to Item 601(b)(10) of Regulation S-K.
Akili's Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations, page 263
42. Please expand your analysis of research and development expenses to
disclose the
components of this expense for each period presented.
43. Please clarify in "Revenue" on pages 263 and 264 why a decrease in
costs incurred affects
the change in revenue for the period.
Summary of Critical Accounting Policies and Significant Judgements and
Estimates
Common Stock Valuations, page 272
44. We note your reference to the use of contemporaneous third-party
valuations of your
common stock. Please expand your disclosures to provide the specific
valuation
approaches and corresponding methods utilized by these third-parties,
including the
material estimates and assumptions used in each method.
Social Capital Suvretta Holdings Corp. I.
Notes to Condensed Financial Stated for Period ended September 30, 2021
Note 2. Restatement of Previously Issued Financial Statements, page F-23
45. Please amend your filing to include your audited balance sheet as of
July 2, 2021 to
incorporate the error corrections disclosed here or explain to us why
such amendment is
not required. Provide an updated opinion from auditor as part of that
amendment.
Chamath Palihapitiya
Social Capital Suvretta Holdings Corp. I
March 15, 2022
Page 10
Item 2. Management's Discussion and Analysis, page F-34
46. Please tell us why the disclosures on pages F-34 through F-37 are
necessary given the
updated disclosures provided on pages 208-212.
2. Summary of Significant Accounting Policies
Revenue from Contracts with Customers, page F-47
47. Please provide your accounting policy for license and/or collaboration
agreements, which
has been included in the revenue line item. As part of this disclosure,
ensure you address
your accounting policy for milestone payments and royalties on sales.
9. Common Stock
Common Stock Warrants, page F-55
48. Please disclose the exercise price for the warrants granted and provide a
summary of the
significant unobservable inputs used in the Black-Scholes option
valuation approach to
estimate the fair value of the warrants.
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.
You may contact Tracey Houser at 202-551-3736 or Mary Mast at
202-551-3613 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Jane Park at 202-551-7439 or Christine Westbrook at 202-551-5019 with
any other
questions.
Sincerely,
FirstName LastNameChamath Palihapitiya
Division of Corporation
Finance
Comapany NameSocial Capital Suvretta Holdings Corp. I
Office of Life Sciences
March 15, 2022 Page 10
cc: Raaj Narayan, Esq.
FirstName LastName