United States securities and exchange commission logo
September 24, 2021
Eli Casdin
Chief Executive Officer and Director
CM Life Sciences III Inc.
c/o Corvex Management LP
667 Madison Avenue
New York, New York 10065
Re: CM Life Sciences
III Inc.
Registration
Statement on Form S-4
Filed August 25,
2021
File No. 333-259054
Dear Mr. Casdin:
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 August 25, 2021
Cover Page
1. Please include on the
inside front cover page the information set forth in Item 2 of Form
S-4.
Q: Following the Business Combination, will the Company's securities
continue to trade on a
stock exchange?, page 14
2. Given that the Nasdaq
listing condition is waivable, please revise to disclose that
shareholders will not
have certainty at the time they vote regarding whether the post-
combination company s
common stock and warrants will be listed on a national securities
exchange following the
business combination. Also, revise the risk factor on page 116 to
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reflect that the Nasdaq listing condition may be waived.
Q: Can the Initial Stockholders redeem their Founder Shares in connection with
consummation
of the Business Combination?, page 24
3. We note that certain the Initial Stakeholders agreed to waive their
redemption rights.
Please describe any consideration provided in exchange for this
agreement.
Cautionary Note Regarding Forward-Looking Statements, page 51
4. We note your reliance upon the safe harbor for forward-looking
statements provided by
the Private Securities Litigation Reform Act of 1995. However, it is
unclear whether this
safe harbor is available for forward-looking statements made in
connection with a SPAC
merger. Therefore, please qualify your assertion with a statement
indicating that there is
uncertainty as to the availability of the safe harbor in connection
with a SPAC merger.
Risk Factors
Mr. Casdin, our chief executive officer and one of our directors, and his
affiliates have interests
in and relationships with EQRx..., page 119
5. Please disclose the approximate dollar value of Mr. Casdin's interest
in the target based on
the transaction value and recent trading prices, as compared to the
price paid. Please also
highlight this information in your Questions and Answers and/or
Summary discussion.
Background of the Business Combination, page 187
6. We note your disclosure on page 188 that the business combination
transactions with
other potential targets were ultimately not pursued. Please expand
your disclosure to
discuss in greater detail these other potential targets, including
their size and material
attributes, the reasons they were not pursued, and whether you entered
into discussions
with any of the other five potential target companies.
7. Please provide further detail on how you initially selected Company A,
the potential terms
discussed with Company A, the progress of those discussions, and the
factors and
discussions surrounding the decision to cease discussions with Company
A. We also note
that there is an overlap of CMLS III's discussions with Company A and
EQRx
between April 26, 2021, when Mr. Casdin requested an updated EQRx
corporate
presentation from Mr. Borisy, and May 27, 2021, when discussions with
Company A
ceased and when Mr. Casdin discussed a business combination with Mr.
Borisy. Please
discuss the overlap of these discussions, including when the CMLS III
Board became
aware of Mr. Casdin's discussions, the considerations the Board
evaluated regarding Mr.
Casdin's role as an interested party, and why EQRx was a more
attractive target
acquisition as compared to Company A.
8. We note that the initial LOI included the following terms: "(i) that
Mr. Casdin and one
member from Softbank would join the board of directors of the combined
public
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company, with up to two additional directors to be agreed upon between
the chief
executive officers of CMLS III and EQRx; (ii) the pre-money equity
value of EQRx of
$4 billion (including a $500 million earn-out based on post-closing
share price
performance); and (iii) at least $1 billion would be raised via a
combination of a private
investment in public equity and forward purchase agreements." Please
describe the basis
for the initial valuation and how you came to it.
9. Please reconcile the pre-money equity values of EQRx described in this
section with
the $3.65 billion in aggregate consideration to be paid in the
transaction.
Opinion of Financial Advisor to CMLS III, page 199
10. Please clarify the criteria on which the companies identified in this
section were selected
and whether any companies that also satisfied those criteria were
omitted from the
analysis. Please also provide similar disclosure regarding the
companies selected for the
Selected Precedent Transactions analysis.
11. Please clarify whether the analyses considered the possibility that
the EQRx product
candidates do not successfully complete clinical trials. If the
analysis did not consider this
possibility, please explain why.
Certain EQRx Projected Financial Information, page 201
12. Please revise to discuss all material assumptions used to develop the
projections, including
which product candidates obtain regulatory approval, the markets in
which you received
regulatory approval, the dates the respective products receive
regulatory approval in each
market, when these products become commercially available, and any
assumptions about
competition and related cost of sales and net income for 2026 and
2028. Additionally,
discuss the possible impact if your assumptions are incorrect, and
identify the probabilities
assigned to management s assumptions. To the extent your projections
are based on
multiple scenarios, discuss that fact, identify the various scenarios
used, and how each
scenario was weighted.
EQRx's Business, page 251
13. Please provide the basis for the statement that your focus on
validated targets will result
in success rates ranging from five to seven out of every ten clinical
candidates. Please
provide similar support for the statement in the founders' letter
regarding the improved
success rate for your product candidates being something closer to
three or five out of ten.
The EQRx business opportunity, page 259
14. Please the balance your discussion in this section and throughout the
prospectus where
appropriate with prominent disclosure that you have no products
approved for commercial
sale and have not generated any revenue to date and that your pricing
model is untested in
the pharmaceutical industry. Please also disclose that there can be no
assurance that your
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pricing model will achieve market acceptance or be able to compete
effectively with
existing models or models introduced in the future.
15. We note your statement regarding the global drug spend in 2021 is
estimated to be
approximately $1 trillion. Please balance this disclosure and the
figure on page 260 with
the size of the markets for the product candidates you are currently
developing.
Time for something new - time for "New Pharma", page 260
16. Please delete the statement that your programs have the potential to
be equivalent or
superior to other therapies in their class as this statement implies
an expectation of
regulatory approval and is inappropriate given the stage of
development for your
programs. Please revise similar statements that your products are
equally as good or
better.
Business model innovation in other industries, page 265
17. We note your comparison to other industries. Please balance the
disclosure in this section
with the fact that your business model is untested in the
pharmaceutical industry, and that
there can be no assurance that your business model will achieve market
acceptance or be
able to compete effectively in the pharmaceutical industry.
Building a catalog of affordable medicines, page 270
18. We note your projection that Aumolertinib (EQ143) and Sugemalimab
(EQ165, also
known as CS1001) are targeting an expected $40 billion drug spend in
2026 and that
Sugemalimab is expected to see an incremental $20 billion in drug
spend in 2026 beyond
your initial indications. Please provide additional information
regarding your basis and the
underlying assumptions of these projections.
19. We note that you include multiple undisclosed programs in the
Pre-Clinical and Drug
Engineering columns of your pipeline table. To the extent that these
programs are
material, please identify the undisclosed product candidates in the
pipeline table. If they
are not material, please remove them. Please also revise the pipeline
table to include
columns for Phase 1, 2, and 3 clinical trials and indicate the phase
of development for
aumolertinib, sugemalimab, lerociclib, EQ176 and EQ121. Please also
disclose whether
you have INDs for each of these product candidates.
Additional information on our pipeline programs, page 276
20. You make numerous references to the safety and efficacy of EQRx's
products throughout
the disclosure. Efficacy and safety are determinations that are solely
within the authority
of the FDA or similar foreign regulators. You may present clinical
trial end points and
objective data resulting from trials without concluding efficacy, and
you may state that
your product candidates are well tolerated if true. Please revise any
statements referencing safety and efficacy as appropriate.
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21. We note your discussions of multiple clinical trials, including those
testing Aumolertinib
(EQ143), Sugemalimab (EQ165), Lerociclib (EQ132), EQ176, and EQ121.
Please expand
your discussions of each of these clinical trials, to include:
The primary and secondary endpoints of the trial;
Whether or not the data from the trial was found to be
statistically significant
(including the P-value); and
Whether any SAEs or AEs have occurred that are linked to treatment
(and the nature
and amount of any such SAEs or AEs).
Intellectual Property, page 287
22. We note in your Patent Portfolio section that your Aumolertinib
(EQ143), Sugemalimab
(EQ165), Lerociclib, EQ176, and EQ121 patent families also include
cases that are
pending and granted in other major jurisdictions. Please revise this
section to specifically
identify all material foreign jurisdictions where patents are granted
or patent applications
are pending and also include the patent expiration dates and expected
expiration dates for
pending patent applications for each material foreign jurisdiction.
Beneficial Ownership of the Securities, page 381
23. We note that your disclosed potential ownership interest does not take
into account (a) the
Public Warrants and Private Placement Warrants that will remain
outstanding
immediately following the Business Combination and may be exercised
thereafter, (b) the
Earn-Out Shares, (c) the issuance of any share upon completion of the
Business
Combination under the 2021 Incentive Plan or the ESPP, or (d) the
portion of
the Closing Merger Consideration that will be allocated to shares
underlying options to
acquire EQRx stock (totaling, in aggregate, assuming full usage of
EQRx s existing equity
pool before completion of the Business Combination and after giving
effect to
the estimated exchange ratio, 26,254,693 shares of CMLS III Class A
common stock) that
may be exercised in the future. Please disclose the sponsor and its
affiliates total potential
ownership interest in the combined company, assuming exercise and
conversion of all
securities.
Certain Material U.S. Federal Income Tax Considerations, page 391
24. Please have counsel provide a tax opinion addressing the tax
consequences to U.S. holders
of CMLS III Class A common stock who exercise redemption rights and
who hold shares
at the time of the Business Combination. The tax opinion should
address and express a
conclusion for each material federal tax consequence. For additional
guidance concerning
assumptions and opinions subject to uncertainty, refer to Staff Legal
Bulletin No. 19.
Exhibits
25. Please file the licensing and collaboration agreements with Hansoh and
the drug
engineering collaboration agreements with Exscientia, AbCellera, and
Relay Therapeutics
as exhibits to the registration statement or explain the basis for
your determination that
Eli Casdin
CM Life Sciences III Inc.
September 24, 2021
Page 6
they are not required to be filed.
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 Kevin Vaughn at 202-551-3494 or Ibolya Ignat at
202-551-3636 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Jordan Nimitz at 202-551-6001 or Christopher Edwards at 202-551-6761
with any other
questions.
Sincerely,
FirstName LastNameEli Casdin
Division of
Corporation Finance
Comapany NameCM Life Sciences III Inc.
Office of Life
Sciences
September 24, 2021 Page 6
cc: Joel Rubinstein, Esq.
FirstName LastName