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United States securities and exchange commission logo
August 16, 2023
Mary Kay Fenton
Chief Financial Officer
Talaris Therapeutics, Inc.
93 Worcester St.
Wellesley, MA 02481
Re: Talaris
Therapeutics, Inc.
Registration
Statement on Form S-4
Filed July 20, 2023
File No. 333-273335
Dear Mary Kay Fenton:
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
What is the Tourmaline pre-closing financing?, page 2
1. Please clarify if the
merger is conditioned upon the consummation of the pre-closing
financing.
What will Talaris stockholders receive in the Merger?, page 4
2. Briefly explain how the
record date and ex-dividend date will impact which Talaris
stockholders will be
entitled to receive any special cash dividend declared by Talaris.
Will the common stock of the combined company trade on an exchange?,
page 5
3. We note your disclosure
that the shares of the combined company are expected to be listed
Mary Kay Fenton
FirstName LastNameMary
Talaris Therapeutics, Inc. Kay Fenton
Comapany
August 16, NameTalaris
2023 Therapeutics, Inc.
August
Page 2 16, 2023 Page 2
FirstName LastName
on Nasdaq. Please revise to disclose if the terms of the merger
agreement permit that the
Nasdaq listing closing condition could be waived without recirculation
or resolicitation. If
so, please revise your risk factors to reflect the risks associated
with any such waiver and
revise to indicate that shareholders may not have certainty at the
time of the vote that the
shares of the combined company will be listed on Nasdaq following the
merger or revise
your disclosure in a pre-effective amendment as appropriate if and
when there is more
certainty regarding the Nasdaq listing of the shares of the combined
company.
Prospectus Summary
Tourmaline, page 10
4. You state that Tourmaline is a late-stage clinical biotechnology
company. Please revise
references to late-stage given that Tourmaline's leading product
candidate, TOUR006, has
recently submitted its IND application to the FDA and has not begun
clinical trials.
5. We note your disclosure here and throughout your prospectus regarding
TOUR006 having
the potential to be "best-in-class." Please remove references to
"best-in-class" as this
implies an expectation of regulatory approval and is inappropriate
given the length of time
and uncertainty with respect to securing marketing approval. If your
intention is to
convey your belief that your platform or your programs utilize a novel
technology or
approach, you may discuss how your technology differs from technology
used by
competitors. Statements such as these should be accompanied by
cautionary language that
the statements are not intended to give any indication that your
technology or any
potential product candidates have been proven effective or will
receive regulatory
approval.
The Merger
Background of the Merger, page 151
6. We note that Talaris management and representatives from Leerink
Partners developed a
list of 43 potential counterparties for the potential reverse merger
transaction that was
approved by the S&T Committee and that of the 43 potential
counterparties, Leerink
Partners distributed process letters on behalf of Talaris to 28
companies that the S&T
Committee determined to be the most viable counterparties. Please
describe the criteria
the S&T Committee used in determining which counterparties should
receive the process
letters and which should not.
7. We note that on March 15, 2023 Tourmaline management shared a
non-confidential
corporate presentation with Leerink Partners who then shared it with
the S&T
Committee. Please discuss the contents of the presentation that would
be material to
Talaris' stockholders.
8. You state that on March 31, 2023 members of the S&T Committee
discussed outreach
they had received from certain potential counterparties. Please
discuss who the parties
were and what was the context of the outreach.
Mary Kay Fenton
FirstName LastNameMary
Talaris Therapeutics, Inc. Kay Fenton
Comapany
August 16, NameTalaris
2023 Therapeutics, Inc.
August
Page 3 16, 2023 Page 3
FirstName LastName
9. We note that on April 11, 2023 the S&T Committee decided to not
advance with Party N.
Please include a description for the reasons the S&T Committee decided
to not move
forward with Party N.
10. You state that on April 14, 2023 the S&T Committee selected to
prioritize the indications
of interest from Tourmaline, Party B, Party C, and Party H and that
the S&T Committee
decided to not move forward with the other 10 participants. We note
that only
15 potential counterparties submitted indications of interest and that
on March 16, 2023
the S&T Committee communicated to Parties F, G, I, J, and L that they
were not invited to
move forward with the reverse merger process. Please clarify who the
other 10
participants that were not invited to move forward on April 14, 2023
are.
11. We note that on April 14, 2023 the S&T Committee proposed certain
revisions to
Tourmaline's transaction proposal. Please clarify if there were any
other proposed
revisions or counterproposals presented to other potential
counterparties.
12. On April 19, 2023 you state that the S&T Committee provided feedback
to be
incorporated in Talaris' next counterproposal to Tourmaline. Please
discuss such
feedback.
Opinion of Talaris' Financial Advisor, page 171
13. We note the disclosure on page 174 that for purposes of its analysis,
Leerink Partners
utilized the estimated exchange ratio of 0.7403 shares of Talaris
common stock for each
share of Tourmaline, based on Talaris' and Tourmaline's respective
capitalization as of
June 22, 2023. However, this estimated exchange ratio does not appear
to be within the
range of the exchange ratios disclosed on the cover page which range
from 0.7553 to
0.7721. Please enhance the disclosure so that it is clear to investors
how Leerink
concluded that the exchange ratio proposed to be paid by Talaris
pursuant to the terms of
the Merger Agreement was fair, from a financial point of view, to
Talaris using the
estimated exchange ratio of 0.7403. We also note the disclosure on
page 175 that
Leerink s analysis resulted in an implied exchange ratio of
approximately 1.2235x to
1.5454x. Please revise to state any conclusions Leerink reached
regarding the exchange
ratio used for purposes of the merger agreement based on the results
of the discounted
cash flow analysis.
Financial Projections, page 179
14. If true, please make clear that the Financial Projections reflect the
assumption that
appropriate patents would be granted for TOUR006 and, if granted,
would not expire until
2043. Please also explain why the Financial Projections were modeled
to reflect the
estimated impact of loss of market exclusivity for the TED indication
in 2039.
Tax Characterization of the Merger, page 192
15. We note your representation that Talaris and Tourmaline "intend" for
the merger to
Mary Kay Fenton
FirstName LastNameMary
Talaris Therapeutics, Inc. Kay Fenton
Comapany
August 16, NameTalaris
2023 Therapeutics, Inc.
August
Page 4 16, 2023 Page 4
FirstName LastName
qualify as a reorganization within the meaning of Section 368(a) of
the U.S. Internal
Revenue Code of 1986, as amended (the "Code"). Please revise your
disclosure here and
throughout to provide counsel s firm opinion for each material tax
consequence, including
whether the merger will qualify as a reorganization, or to explain why
such opinion cannot
be given. If the opinion is subject to uncertainty, please (1) provide
an opinion that
reflects the degree of uncertainty (e.g., "should" or "more likely
than not") and explains
the facts or circumstances giving rise to the uncertainty, and (2)
provide disclosure of the
possible alternative tax consequences including risk factor and/or
other appropriate
disclosure setting forth the risks of uncertain tax treatment to
investors. Please refer to
Item 601(b)(8) of Regulation S-K and Section III.A of Staff Legal
Bulletin 19, Legality
and Tax Opinions in Registered Offerings for guidance.
Securities Purchase Agreement, page 222
16. We note your description of the Securities Purchase Agreement. Please
identify each
shareholder who, as a result of purchasing securities pursuant to such
agreement, is
expected to be a beneficial owner of 5% or more of the outstanding
shares of the
combined company following the financing and the merger.
Proposal No. 4-The Incentive Plan Proposal, page 245
17. We note your disclosure on page 245 that under the 2023 Plan that the
stockholders are
being asked to approve, the combined company s board of directors
will generally have
the authority to effect, without the approval of stockholders, (1) the
reduction of the
exercise, purchase, or strike price of any outstanding option or stock
appreciation right;
(2) the cancellation of any outstanding option or stock appreciation
right and the grant in
substitution therefore of other awards, cash, or other consideration;
or (3) any other action
that is treated as a repricing under generally accepted accounting
principles. Please
include appropriate disclosure regarding these repricing provisions
which could occur
without stockholder approval, including whether proxy advisory firms
could find any such
repricings without stockholder approval contrary to a
performance-based pay philosophy.
Talaris' Business
Overview, page 260
18. We note in February 2023 Talaris announced the discontinuation of its
FREEDOM-1 and
FREEDOM-2 clinical trials and in March 2023 Talaris voluntarily paused
its FREEDOM-
3 trials. We also note that on page 36 you discuss the risks
concerning if Talaris were to
resume development of its product candidates. Please clarify here
whether Talaris has had
discussions with Tourmaline on continuing these trials.
Talaris' Product Candidates and Historical Business, page 261
19. You state that the degree of immune mismatch between the donor and
recipient did not
appear to impact the safety and efficacy of Talris' therapy candidate.
Safety and efficacy
Mary Kay Fenton
Talaris Therapeutics, Inc.
August 16, 2023
Page 5
determinations are solely within the authority of the FDA or
applicable foreign regulator.
Please revise or remove this statement and similar statements
throughout your prospectus.
Note that you may state your product candidate has been well
tolerated, if accurate.
Phase 2 Clinical Trial Results as of March 1, 2023
Indication of Durable Chimerism and Withdrawal of Immunosuppression, page 270
20. You make references to a "figure above" that denotes patients
achieving durable donor
chimerism and weaning off their chronic immunosuppressants without
rejecting the
transplanted organ and refining Talaris' Phase 2 protocol to exclude
female donors to
unrelated male recipients. Please include the referenced figure or
remove such references.
Talaris' Phase 2 Results - Quality of Life ("QoL"), page 276
21. You state that the General Health Component of SF-36 and the EQ-5D-5L
questionnaires
reported statistically significant rates. Please provide p-values and
define the term and the
significance of the p-value results shown.
HSCT as Potential Treatment for dcSSc, page 281
22. Please define TBI at first use.
Tourmaline's Business
Overview, page 304
23. You disclose that Tourmaline has submitted its IND in the U.S. to
support initiation of its
Phase 2b trial of TOUR006 in first-line TED and plans to submit an IND
to support
initiation of a Phase 2 ASCVD trial in 2024. In an appropriate
location, briefly indicate
why you believe Tourmaline would not need to conduct Phase 1 trials
for these
indications. Include risk factor disclosure if appropriate.
Tourmaline's Pipeline, page 304
24. Your pipeline table includes Thyroid Eye Disease Expansion Cohorts
that, according to
your disclosure under "TOUR006 for the Treatment of Additional TED
Populations" on
page 315, appears to be in the study or pre-clinical phase at this
time. Please limit your
table to product candidates that are sufficiently material to your
business to warrant
inclusion and, if sufficiently material, tell us whether this
indication should be shown as
pre-clinical in Tourmaline's pipeline table.
25. Based on the disclosure, it does not appear that Tourmaline has received
IND approval at
FirstName LastNameMary Kay Fenton
this time for the clinical trials indicated in the pipeline table. Since
the pipeline table
Comapany
couldNameTalaris Therapeutics,
read as showing Inc. is currently in clinical
trials, please revise your
that Tourmaline
Augusttable as appropriate
16, 2023 Page 5 to more clearly show the current status of the
programs.
FirstName LastName
Mary Kay Fenton
FirstName LastNameMary
Talaris Therapeutics, Inc. Kay Fenton
Comapany
August 16, NameTalaris
2023 Therapeutics, Inc.
August
Page 6 16, 2023 Page 6
FirstName LastName
Corporate History and Tourmaline's Team, page 305
26. You state that Tourmaline's management team has been involved in the
development of
approved pharmaceutical products such as YERVOY, OPDIVO, KALBITOR,
TAKHZYRO, and DALIRESP. Please clarify that although these products
were
approved, they are not an indication that your product candidates will
be approved or
receive orphan and/or large market designations.
27. You state that Tourmaline has raised money in private financing from
leading
biotechnology investors including Deep Track Capital, Cowen Healthcare
Investments,
QVT, Braidwell, Hydra, Petrichor, TCGX, KVP, RTW, Avego, Vivo, and
Logos. Please
limit the disclosure of specific investors to those identified in the
Principal Shareholder
table on page 398. Additionally, indicate that prospective investors
should not rely on the
named investors investment decisions, that these investors may have
different risk
tolerances and the securities purchased by those investors may have
been conducted at a
significant discount to price reflected in the merger agreement.
Our Product Candidate: TOUR006, page 309
28. We note your disclosure that TOUR006 was originally developed from a
hybridoma cell
line using a transgenic mouse platform and that the IgG1 isotype of
the original clone was
switched by Pfizer to IgG2 to reduce Fc receptor binding, thereby
creating TOUR006.
Along with this disclosure, please add a brief discussion of how
TOUR006 is considered a
fully human monoclonal antibody.
29. You state that TOUR006 was tested by Pfizer and across those studies
TOUR006 has
demonstrated a safety profile consistent with the IL-6 class. Safety
is a determination that
is within the authority of the FDA. Please revise or remove these
statements and similar
statements throughout your prospectus. Note that you may state your
product candidate
has been well tolerated, if accurate.
30. You disclose that TOUR006 has demonstrated low rates of anti-drug
antibodies
( ADAs ). Please disclose if the sample size of the data on which
you base this disclosure
is sufficient to draw statistically meaningful conclusions in that
regard.
31. In your table on page 310 you indicate that a black box warning is
"N/A" for TOUR006.
Please tell us how you have determined at this time that such
labelling would be not
applicable or revise your disclosure as appropriate.
Current Treatment Paradigm for TED, page 311
32. You state that the TEPEZZA had a proptosis response rate defined as a
greater than or
equal to 2mm decrease in proptosis from baseline. Please explain the
significance of the
result.
Mary Kay Fenton
FirstName LastNameMary
Talaris Therapeutics, Inc. Kay Fenton
Comapany
August 16, NameTalaris
2023 Therapeutics, Inc.
August
Page 7 16, 2023 Page 7
FirstName LastName
Clinical Experience in TED with IL-6 Inhibition, page 312
33. We note your disclosure that tocilizumab, an anti-IL-6R antibody, was
reported to offer
meaningful improvement in efficacy outcomes. Since efficacy
determinations are within
the authority of the FDA or other applicable regulators, please revise
this statement as
appropriate. Please also disclose whether the studies presented in the
table on page 313
were geared for statistical significance. In addition, if the
inference to be made here is
that anti-IL-6 antibodies, such as TOUR006, would perform as well as
anti-IL-6 receptor
antibodies, please include any cautionary disclosure that would be
appropriate.
Clinical Experience with TOUR006, page 318
34. We note your disclosure of trials related to your product candidate
throughout this
section. Please revise to clarify whether each trial was powered for
statistical
significance. If a trial was powered for statistical significance,
please provide p-values for
the results of each trial. If no statistical analysis was performed,
please state so.
License Agreement with Pfizer, page 323
35. Please clarify if the transactions related to the merger agreement
will constitute a
Significant Transaction under the License Agreement for purposes of
the one-time
payment described at the top of page 324.
PD and Efficacy Data, page 323
36. We note your use of p-values for the CDAI-70 response rate. At first
use, please provide
a brief explanation of the disclosed p-value and how it is used to
measure statistical
significance.
Patents, page 327
37. Please disclose the jurisdictions where Tourmaline's patent
applications have been filed.
Please also disclose the specified indications the patent applications
would cover if
granted.
Unaudited Pro Forma Condensed Combined Financial Information
Adjustments to the Unaudited Pro Forma Condensed Combined Financial Information
4. F, page 380
38. Please provide the calculation for how you determined that 150,997,662
shares of Talaris
shares will be received in exchange for 128,148,529 Tourmaline shares
considering the
estimated exchange ratio of .7592.
Principal Stockholders of the Combined Company, page 401
39. Please revise your disclosure to identify the natural person or
persons who have voting
and investment control of the shares held by the entities affiliated
with Cowen Healthcare
Mary Kay Fenton
Talaris Therapeutics, Inc.
August 16, 2023
Page 8
Investments.
Exhibits
40. We note you intend to file the form of preliminary proxy card as Exhibit
99.1. Please note
that the form of proxy card should be filed as an appendix rather than
as an exhibit to the
registration statement. Refer to the Note to paragraph (a)(3) of
Exchange Act Rule 14a-4.
General
41. Please supplementally provide us with copies of all materials prepared
by Leerink and
shared with Talaris board of directors and their representatives,
including any board
books, transcripts and summaries of oral presentations, that were
material to the board's
decision to approve the merger and the transactions contemplated
thereby.
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 Christine Torney at 202-551-3652 or Daniel Gordon at
202-551-3486 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Doris Stacey Gama at 202-551-3188 or Tim Buchmiller at 202-551-3635
with any other
questions.
Sincerely,
FirstName LastNameMary Kay Fenton
Division of
Corporation Finance
Comapany NameTalaris Therapeutics, Inc.
Office of Life
Sciences
August 16, 2023 Page 8
cc: Sarah Ashfaq, Esq.
FirstName LastName