View:
United States securities and exchange commission logo
March 14, 2022
Raymond Stevens
Chief Executive Officer
ShouTi Inc.
611 Gateway Blvd., Suite 223
South San Francisco, CA 94080
Re: ShouTi Inc.
Draft Registration
Statement on Form S-1
Submitted February
14, 2022
CIK No. 0001888886
Dear Dr. Stevens:
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
Cover Page
1. Provide prominent
disclosure about the legal and operational risks associated with being
based in or having the
majority of the company s operations in China. Your disclosure
should make clear
whether these risks could result in a material change in your operations
and/or the value of the
securities you are registering for sale or could significantly limit or
completely hinder your
ability to offer or continue to offer securities to investors and
cause the value of such
securities to significantly decline or be worthless. Your disclosure
should address how
recent statements and regulatory actions by China s government, such
as those related to
data security or anti-monopoly concerns, have or may impact the
company s ability to
conduct its business, accept foreign investments, or list on a U.S. or
Raymond Stevens
FirstName
ShouTi Inc.LastNameRaymond Stevens
Comapany
March NameShouTi Inc.
14, 2022
March2 14, 2022 Page 2
Page
FirstName LastName
other foreign exchange. Please disclose whether your auditor is
subject to the
determinations announced by the PCAOB on December 16, 2021 and whether
and how
the Holding Foreign Companies Accountable Act and related regulations
will affect your
company. Your prospectus summary should address, but not necessarily
be limited to, the
risks highlighted on the prospectus cover page.
2. Provide a description of how cash is transferred through your
organization. State whether
any transfers, dividends, or distributions have been made to date
between the holding
company and its subsidiaries, or to investors, and quantify the
amounts where applicable.
Provide cross-references to the consolidated financial statements.
Prosepctus Summary, page 3
3. In your summary of risk factors, disclose the risks that your
corporate structure and being
based in or having the majority of the company s operations in China
poses to investors.
In particular, describe the significant regulatory, liquidity, and
enforcement risks with
cross-references to the more detailed discussion of these risks in the
prospectus. For
example, specifically discuss risks arising from the legal system in
China, including risks
and uncertainties regarding the enforcement of laws and that rules and
regulations in
China can change quickly with little advance notice; and the risk that
the Chinese
government may intervene or influence your operations at any time, or
may exert more
control over offerings conducted overseas and/or foreign investment in
China-based
issuers, which could result in a material change in your operations
and/or the value of the
securities you are registering for sale. Acknowledge any risks that
any actions by the
Chinese government to exert more oversight and control over offerings
that are conducted
overseas and/or foreign investment in China-based issuers could
significantly limit or
completely hinder your ability to offer or continue to offer
securities to investors and
cause the value of such securities to significantly decline or be
worthless.
4. Disclose each permission or approval that you or your subsidiaries are
required to obtain
from Chinese authorities to operate your business and to offer the
securities being
registered to foreign investors. State whether you or your
subsidiaries are covered by
permissions requirements from the China Securities Regulatory
Commission (CSRC),
Cyberspace Administration of China (CAC) or any other governmental
agency that is
required to approve your operations, and state affirmatively whether
you have received all
requisite permissions or approvals and whether any permissions or
approvals have been
denied. Please also describe the consequences to you and your
investors if you or your
subsidiaries: (i) do not receive or maintain such permissions or
approvals, (ii)
inadvertently conclude that such permissions or approvals are not
required, or (iii)
applicable laws, regulations, or interpretations change and you are
required to obtain such
permissions or approvals in the future.
5. Provide a clear description of how cash is transferred through your
organization. Quantify
any cash flows and transfers of other assets by type that have
occurred between the
holding company and its subsidiaries, and direction of transfer.
Quantify any dividends or
Raymond Stevens
FirstName
ShouTi Inc.LastNameRaymond Stevens
Comapany
March NameShouTi Inc.
14, 2022
March3 14, 2022 Page 3
Page
FirstName LastName
distributions that a subsidiary has made to the holding company and
which entity made
such transfer, and their tax consequences. Similarly quantify
dividends or distributions
made to U.S. investors, the source, and their tax consequences. Your
disclosure should
make clear if no transfers, dividends, or distributions have been made
to date. Describe
any restrictions on foreign exchange and your ability to transfer cash
between entities,
across borders, and to U.S. investors. Describe any restrictions and
limitations on your
ability to distribute earnings from the company, including your
subsidiaries, to the parent
company and U.S. investors.
6. Disclose that trading in your securities may be prohibited under the
Holding Foreign
Companies Accountable Act if the PCAOB determines that it cannot
inspect or investigate
completely your auditor, and that as a result an exchange may
determine to delist your
securities. Disclose whether your auditor is subject to the
determinations announced by
the PCAOB on December 16, 2021.
7. Please revise your disclosure in the Overview section to disclose that
the location of the
ongoing and planned clinical trials described in this section is in
Australia and whether
you expect there to be any limitations to using the trial results for
approval by the FDA
since the trials are being conducted outside of the United States.
8. We note the reference that other GPCRs have provided significant
benefit to patients and
have achieved blockbuster sales. Please revise to balance the
disclosure and similar
comparisons to marketed products that target GLP-1R elsewhere in the
prospectus to
indicate that your products candidates are in the very early stages of
clinical development,
that it will take many years to commercialize your product candidates
and if you are
successful in obtaining approval for your product candidates that
there can be no
guarantee that your products will achieve similar results.
9. We note your statements on pages 3, 4, 5, 108, and elsewhere in the
prospectus that your
product candidates are "potential-best-in-class." The term
"best-in-class" suggests that the
product candidates are effective and likely to be approved as a drug.
Given the early
stages of your candidates, it is not appropriate to suggest that this
product is likely to be
effective or receive regulatory approval. Please remove these
references.
Our Pipeline and Programs, page 4
10. Please revise your pipeline tables to present Structure-Based
Discovery, Lead
Optimization, and IND-enabling studies in one column given that all of
these studies are
preclinical trials. Additionally, we note that you have included
second and third
generation programs in the discovery phase for which no product
candidate has been
identified and for which the first generation product has not
commenced Phase 1 testing.
Please provide us your analysis as to why these programs are material
enough to be
included in your pipeline table. Alternatively, remove them from your
table.
11. You state that "GSBR-1290, is an oral and fully biased small molecule
agonist of GLP-
1R, a well-validated GPCR drug target for diabetes and obesity."
Please tell us the basis
Raymond Stevens
FirstName
ShouTi Inc.LastNameRaymond Stevens
Comapany
March NameShouTi Inc.
14, 2022
March4 14, 2022 Page 4
Page
FirstName LastName
for this molecule to be considered a "well-validated GPCR drug
target."
Our Management Team and Investors, page 5
12. We note that you identify certain entities as investors in your
company on page 5;
however some do not appear to be among your principal stockholders as
disclosed on
page 182. Please limit the disclosure of specific investors to those
identified in the
Principal Shareholders table.
Risk Factors, page 14
13. Please expand your risk factors to disclose that the United States
Senate has passed the
Accelerating Holding Foreign Companies Accountable Act, which, if
enacted, would
decrease the number of non-inspection years from three years to
two years, and thus,
would reduce the time before your securities may be prohibited from
trading or delisted.
Update your disclosure to reflect that the Commission adopted rules to
implement the
HFCAA and that, pursuant to the HFCAA, the PCAOB has issued its report
notifying the
Commission of its determination that it is unable to inspect or
investigate completely
accounting firms headquartered in mainland China or Hong Kong.
14. Given the Chinese government s significant oversight and discretion
over the conduct of
your business, please revise to highlight separately the risk that the
Chinese government
may intervene or influence your operations at any time, which could
result in a material
change in your operations and/or the value of the securities you are
registering. Also,
given recent statements by the Chinese government indicating an intent
to exert more
oversight and control over offerings that are conducted overseas
and/or foreign investment
in China-based issuers, acknowledge the risk that any such action
could significantly limit
or completely hinder your ability to offer or continue to offer
securities to investors and
cause the value of such securities to significantly decline or be
worthless.
15. In light of recent events indicating greater oversight by the
Cyberspace Administration of
China (CAC) over data security, particularly for companies seeking to
list on a foreign
exchange, please revise your disclosure to explain how this oversight
impacts your
business and your offering and to what extent you believe that you are
compliant with the
regulations or policies that have been issued by the CAC to date.
Use of Proceeds, page 87
16. Please revise your disclosure to indicate how far the proceeds from
the offering will allow
you to proceed with continued development of each program referenced.
Our Pipeline and Programs, page 111
17. On page 11 and elsewhere you state that "GSBR-1290 is a potent biased
GLP-1R
agonist." As safety and efficacy determinations are solely within the
FDA's authority and
they continued to be evaluated throughout all phases of clinical
trials, please remove these
Raymond Stevens
FirstName
ShouTi Inc.LastNameRaymond Stevens
Comapany
March NameShouTi Inc.
14, 2022
March5 14, 2022 Page 5
Page
FirstName LastName
and any similar references in your prospectus. You may present
objective data resulting
from trials without including conclusions related to efficacy.
GPCR Experience, page 116
18. We note your statement regarding your collaboration with Schr dinger
and how it enables
you to increase the likelihood of clinical success compared to
traditional drug discovery
processes. Given the stage of your product candidates and the length
of time and
uncertainty involved in product candidate development, please revise
the prospectus to
remove any implication that your product candidates are more likely
than others to receive
approval from the FDA or comparable regulators.
Our Solution: Small Molecule Biased APJR Agonist, page 131
19. We note several comparisons to certain approved therapies, including
the chart on page
131 comparing the attributes of your product candidates to apelin
peptide and several
clinically tested competitor compounds. If you have not conducted
head-to-head trials,
please revise your disclosure to clearly state this fact and disclose
why you believe these
comparisons are appropriate. If you provide disclosure regarding
results from other trials,
expand your disclosure to provide the other information regarding
these trials that would
help an investor make a meaningful comparison and understand the
supporting trials and
any limitations and qualifications associated with such trials (e.g.,
number of patients and
whether any patients dropped out of the trial or were otherwise
excluded and the reasons,
patient population, dosage, how the baseline was measured in each
study, the phase of the
trial, serious adverse events, etc.).
Intellectual Property, page 137
20. Please disclose the number of pending patent applications for your
GLP-1R and Apelin
Receptor programs and the jurisdictions in which they have been filed.
Lhotse Collaboration Agreement with Schrdinger, LLC, page 138
21. Please disclose the amounts that have been paid to date pursuant to
the Lhotse
Collaboration Agreement with Schr dinger.
Initial Public Offering Participation Rights, page 180
22. Please disclose the number of shares or ADSs that BVF is eligible to
purchase in the
offering.
General
23. 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.
Raymond Stevens
ShouTi Inc.
March 14, 2022
Page 6
You may contact Vanessa Robertson at (202) 551-3649 or Terence O'Brien
at (202) 551-
3355 if you have questions regarding comments on the financial statements and
related
matters. Please contact Gary Guttenberg at (202) 551-6477 or Christopher
Edwards at (202)
551-6761 with any other questions.
Sincerely,
FirstName LastNameRaymond Stevens
Division of
Corporation Finance
Comapany NameShouTi Inc.
Office of Life
Sciences
March 14, 2022 Page 6
cc: James Lu
FirstName LastName