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July 5, 2024
David D. Halbert
Chairman, Founder & Chief Executive Officer
Caris Life Sciences, Inc.
750 W. John Carpenter Freeway
Suite 800
Irving, TX 75039
Re: Caris Life Sciences, Inc.
Draft Registration Statement on Form S-1
Submitted June 10, 2024
CIK No. 0002019410
Dear David D. Halbert:
We have reviewed your draft registration statement and have the
following comment(s).
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 a comment applies 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 this letter
and your amended
draft registration statement or filed registration statement, we may have
additional comments.
Draft Registration Statement on Form S-1
Letter from Chairman, Founder, and CEO, page iii
1. Please revise or explain the connection between AdvancePCS's sale in
2004 and this
offering, and include balancing disclosure that prior performance is not
indicative of your
future results.
Prospectus Summary, page 1
2. We note that you make various statements throughout the registration
statement regarding
your leadership in your field and the efficacy of your products
including, but not limited
to, the following:
Page iii: "We were both the first comprehensive molecular
profiling service and the
first to offer whole exome and whole transcriptome sequencing for
every patient for
July 5, 2024
Page 2
both tissue- and blood-based profiling."
Page iii: "[W]e were first to offer an AI-based drug response
predictor for metastatic
colorectal cancer patients as well as the first to offer
biomarker-driven clinical trials
matching and right-in-time clinical trial service."
Page 1: "We are a leading, patient-centric, next-generation AI
TechBio company and
precision medicine pioneer."
Page 1: "We have spent the last 16 years developing and building
our portfolio of
comprehensive, proprietary molecular profiling solutions and
generating one of the
largest and most comprehensive multi-modal clinico-genomic datasets
in oncology."
Page 2: "We sequence at sector-leading depth of coverage, which
directly correlates
with increased accuracy and detection of low frequency molecular
markers of
relevance."
Page 2: "As the leader in the transition to WES/WTS sequencing, we
believe we have
more molecular data and information than any other company and are
well-positioned
to make precision medicine widely accessible."
Page 2: "The Caris Precision Oncology Alliance ( Caris POA ),
which we
established in 2015, is now one of the leading research and data
organizations in
precision medicine in the United States and is comprised of over 90
members,
including over 40 leading National Cancer Institute ( NCI
)-designated
comprehensive cancer centers."
Please revise your disclosure throughout the prospectus to provide the
basis for any
statements, including those above, related to leadership in your field
and the efficacy of
your products. Please also ensure you disclose any relevant metrics on
which these
statements are based and any material assumptions.
3. We note the disclosure that your current commercial product portfolio is
focused on
oncology and consists of MI Profile, your tissue-based molecular
profiling solution, and
Caris Assure, your blood-based molecular profiling solution for therapy
selection. Please
revise to clarify that the majority of your current revenues is
generated from your tissue-
based molecular profiling solution.
4. Please revise to explain and substantiate how your Caris platform drives
"superior"
clinical outcomes for patients and benefits from a virtuous cycle that
enables continued
innovation and impact.
5. Please balance your summary disclosures by including a discussion of
your substantial
indebtedness and current sources of liquidity. Please also expand your
discussion of your
net losses for the years ended December 31, 2023 and 2022 to briefly
discuss your costs
and operating expenses.
The Caris Platform, page 3
6. Please revise to provide additional context for your business
description by clarifying that
you have not yet obtained FDA marketing authorization for any of your
solutions,
including MI Cancer Seek and Caris Assure. We note your disclosure on
page 54.
July 5, 2024
Page 3
Risk Factors
Our billing, collections, and claims processing activities are complex and
time-consuming, and
any delay in transmitting ..., page 27
7. We note your disclosure that you "are currently in litigation that
[you] initiated with
United Healthcare, regarding United Healthcare s ability to recoup
payments made for MI
Profile, relating to the use of allegedly incorrect billing codes." To
provide additional
context for the risk factor disclosure, please revise to disclose the
amounts of the
payments that United Healthcare is seeking to recoup.
If our facilities or those of our third-party collaborators are insufficient or
become inoperable, our
ability to provide our solutions ..., page 30
8. We note your disclosure that "[i]n 2020, [you] began the process of
constructing a new
laboratory facility in Irving, Texas to increase product development
and operational
capacity." Please revise to discuss the timeline for completion of the
facility and
obtaining, if applicable, CLIA accreditation. We also note your
disclosure on page 58
that "[b]oth of the Phoenix laboratory facilities hold independent CLIA
Certificates of
Accreditation" while your "laboratory facility in Irving, Texas holds a
CLIA Certificate of
Registration." Please revise to explain the difference between CLIA
accreditation and
registration.
Our amended and restated certificate of formation will provide that the
Business Court in the First
Business Court Division ..., page 85
9. We note your disclosure that the forum selection provision in your
amended and restated
certificate of formation may have the effect of discouraging lawsuits
against you and
your directors, officers or other employees. Please revise this risk
factor to disclose that
there is also a risk that your forum selection provision may result in
increased costs for
investors to bring a claim.
Use of Proceeds, page 93
10. We note the disclosure that you "have no specific plan for the net
proceeds from this
offering, or any significant portion thereof. However, we intend to use
the net proceeds
from this offering for general corporate purposes, including working
capital, operating
expenses, and capital expenditures." You also disclose on page 110 that
you believe your
existing cash and cash equivalents and anticipated cash flows from
operations, "together
with the net proceeds from this offering," will provide sufficient
capital and liquidity to
fund your operating expenses and capital expenditure requirements for
at least the next
12 months after the completion of this offering. As applicable, please
provide further
detail regarding the use of the proceeds towards your indebtedness.
Please refer to
Instruction 4 to Item 504 of Regulation S-K.
Management's Discussion And Analysis Of Financial Condition And Results Of
Operations
Overview, page 100
11. We note your disclosure that you "remain the only genomic profiling
company to
consistently utilize WES and WTS as standard practice on every eligible
patient sample."
Please revise, either here or elsewhere in the registration statement,
to explain how you
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Page 4
determine the eligibility of patient samples. Please also discuss how
the patient samples
are sourced.
Our Business Model, page 101
12. We note your disclosure that you "have robust Medicare and broad
commercial
reimbursement for MI Profile, with over 255 million covered lives in the
United States".
Please revise to explain what you mean by "broad commercial
reimbursement".
13. We note your disclosure that you "also generate revenue utilizing [y]our
Caris Platform to
provide R&D services for biopharma partners, who [you] partner with to
help improve the
efficiency and success of their therapeutic development and clinical
programs." Please
revise to discuss the specific services offered to your biopharma
partners. Please also
disclose the terms of any material contracts with your biopharma
partners, including your
research partnerships with Moderna, AbbVie, Xencor, and Merck KGaA, and
file any
such contracts as exhibits to this registration statement or provide
your analysis as to why
such contracts are not required to be filed. Refer to Item 601(b)(10) of
Regulation S-K.
Cost of Services, page 107
14. We note as part of your discussions of costs and operating expenses you
sometimes
quantify the components of an increase or decrease without providing
further
quantification or insight. For example, as part of your discussion of
the cost of molecular
profiling services you set forth, in part, the MI Profile tissue
laboratory contributed a
$15.6 million increase in materials, $10.4 million increase in
laboratory labor costs,
$5.4 million related to equipment leases and maintenance, and $1.8
million in other costs,
including costs related to freight and third-party laboratory software.
Please revise your
discussion to provide additional quantitative and qualitative
information related to the
significant costs and expenses you identify, including quantifying the
related underlying
amount and providing any related discussion and analysis to enhance an
investor's
understanding of your results of operations, consistent Item 303 of
Regulation S-K.
Management's Discussion And Analysis Of Financial Condition And Results Of
Operations
Molecular Profiling Services Revenue, page 107
15. We note your 16.9% increase in revenue was primarily due to the increase
in clinical
cases associated with MI Profile and Caris Assure for therapy selection
from 97,039 and
223 cases to 128,168 and 663 cases, a total increase of 31,569 cases or
32.5%. Please
revise your disclosure to provide additional information to better allow
investors to view
the registrant from management s perspective, as set forth in Item
303(a) of Regulation S-
K. Please:
revise your discussion to describe the underlying reasons for the
increase in clinical
cases associated with MI Profile and provide any other information
that would be
material to an understanding of the increase in cases and revenue;
discuss in further detail why revenue increased 16.9% when cases
increased 32.5%,
and any known trends related to the decline in average selling price
and change in
payer mix. Quantify the impact from the decline in selling prices;
and
Discuss the reasons why international revenue declined, as set
forth on page F-40.
July 5, 2024
Page 5
Business
Overview, page 118
16. Please revise to clearly disclose the current stage of development
and/or
commercialization of each of your products and product candidates. In
particular, please
disclose which products are currently being sold, when they commenced
sales, and in
which markets the products are being sold. Consider providing this
information in
narrative and tabular format for ease of reference. We also note your
disclosure that MI
Profile is your "market-leading tissue-based molecular profiling
solution" and that Caris
Assure is your "novel, universal blood-based molecular profiling
solution". Please revise
to explain by what metric MI Profile is "market-leading". Please also
discuss the timetable
for Caris Assure's application to MCED, MRD tracking, and treatment
monitoring.
17. Please revise your disclosure regarding your estimated total addressable
U.S. market to
discuss the assumptions underlying each of the elements comprising the
$150 Billion
TAM. As an example only, we note your disclosure on page 128 that you
"expect
biopharma companies to keep increasing the allocation of their total
research and
development ( R&D ) investment, which totaled $262 billion in 2023"
and that you
"estimate the total addressable U.S. market for this opportunity is
approximately
$10 billion." Please explain the basis for your total addressable market
opportunity
estimate. As applicable, please also revise the disclosure on page 5.
Caris Assure - Our Universal Blood-Based Profiling Solution, page 134
18. Please revise to further explain how many of your competitors
offerings are "siloed" and
"require continued investment for the development of new products and
generate
disparate datasets across the patient journey for patients, oncologists,
and researchers."
Our Solutions, page 134
19. Please revise to more clearly explain the use of Caris Assure vis-a-vis
MI Profile for
molecular profiling. We note your disclosure that MI Profile is a
tissue-based molecular
profiling solution including WES/WTS NGS assay and IHC protein
expression testing,
and that Caris Assure is a universal blood-based solution providing WES
and WTS for
every eligible patient sample. In particular, please explain if there is
any overlap between
Caris Assure and MI Profile regarding commercial use, and further
discuss the advantages
or disadvantages to blood-based versus tissue-based molecular profiling.
For example, we
note your disclosure on page 134 that "Caris Assure has many more
opportunities for
testing relative to tissue profiling."
20. Please revise your disclosures on pages 136-138 to further discuss the
studies cited. In
particular, please disclose the date of the studies and the parties
conducting the studies,
including whether the parties are affiliates or partners of Caris.
21. We note your disclosure on page 142 that you "use IHC testing to
complement [y]our
WES/WTS profiling both to inform decisions regarding therapy selection
as well as to act
as confirmatory testing in circumstances where [y]our GPSai algorithm
indicates a
different diagnosis than that indicated in the patient record prior to
[y]our profiling."
Please revise to further discuss how IHC testing is employed.
22. We note your disclosure on page 142 that you "clinically validated
FOLFIRST using a
July 5, 2024
Page 6
real-world evidence dataset collected from the Caris POA registry." We
also note your
disclosure that "GPSai was trained and validated through retrospective
profiling data from
over 250,000 clinical cases using the outside pathologist diagnosis as
the baseline." Please
revise to explain the significance of a clinical validation, and also
disclose the regulatory
body or entity that provided the validations.
23. We note your tabular disclosure on page 144 regarding the performance of
MI Tumor
Seek Hybrid. Please revise to discuss the relevance of the PPA, NPA and
OPA
percentages in the table.
Data for Biopharma, page 148
24. We note your disclosure that you "license deidentified data that [you]
have generated
from [y]our clinical profiling business to biopharma companies with the
aim of generating
insights directly responsible for superior clinical outcomes for
patients." Please revise to
briefly explain the process through which you deidentify your patient
data.
Caris Molecular AI Launches & Signature Pipeline, page 152
25. Please revise to briefly discuss each of the products listed in the
pipeline table. In
particular, please disclose which products are currently being sold,
when they commenced
sales, and in which markets the products are being sold. Please also
clarify the stages of
development included in the pipeline, such as "development", "external
validation" and
"launch." Finally, please also describe the external validation and
disclose if any
regulatory approvals have been obtained, sought or are required for the
products.
Intellectual Property, page 155
26. Please expand your disclosure relating to your patent portfolio and
identify for each
material patent and patent application, as applicable, the scope and
technology of each
such patent or patent application, the type of patent protection,
jurisdiction, and expiration
dates. Consider adding tabular disclosure in addition to the narrative
for ease of use.
Government Regulation, page 157
27. Please revise this section to clearly state the regulatory approvals
that you have applied
for, obtained, or will apply for, with regards to each of your products
and product
candidates, including but not limited to Caris Assure, MI Profile, MI
Tumor Seek Hybrid,
MI Cancer Seek, FOLFIRST, GPSai and your IHC tests. Please also explain
the
regulatory approvals required to bring each product to market and
provide a timetable of
when such regulatory approvals were obtained and/or are expected to be
applied for
and/or obtained. Consider providing this information in narrative and
tabular format for
ease of reference.
28. We note your disclosure on page 157 that you have "submitted a PMA
seeking regulatory
approval from the FDA for a companion diagnostic and tumor profiling
designation for
MI Cancer Seek, a WES/WTS NGS panel that [you] anticipate transitioning
to using as
the WES/WTS NGS component of MI Profile if approved by the FDA." Please
revise to
explain why a PMA is required for MI Cancer Seek. Please also explain
the difference
between MI Cancer Seek and MI Tumor Seek Hybrid, including why you plan
to transition from MI Tumor Seek Hybrid to MI Cancer Seek if the latter
receives
July 5, 2024
Page 7
regulatory approval from the FDA.
Certain Relationships And Related Party Transactions, page 191
29. We note your disclosure that you have entered into "consulting and
expert advisory
agreements with George H. Poste and Jonathan Knowles, members of [y]our
board of
directors, pursuant to which Dr. Poste and Dr. Knowles provide certain
consulting
services to [you] as independent contractors and serve on [u]our
Scientific Advisory
Board." Please disclose the amounts that were paid to Messrs. Poste and
Knowles for their
consulting services, and file the agreements as exhibits to your
registration statement.
Description of Capital Stock, page 197
30. Please revise to describe the terms of the Series A, B, C and D
preferred stock in this
section of your prospectus. We note your disclosures on page F-27.
Consolidated Financial Statements
Molecular Profiling Services, page F-10
31. Please revise your disclosure to describe the following:
Your significant payment terms, including when payment
typically is due, as set forth
in ASC 606-10-50-12(b);
Any obligations for returns, refunds, and other similar
obligations, as set forth in ASC
606-10-50-12(d);
Any types of warranties and related obligations, as set forth
in ASC 606-10-50-12(e);
and
Greater detail about the inputs and assumptions, as set forth
in ASC 606-10-50-20(a),
(b) and (c). Also refer to ASC 606-10-50-1 which sets forth, in
part, that an entity
shall disclose quantitative and qualitative information about the
the significant
judgments, and changes in the judgments, made in applying ASC
606.
Exhibit Index, page II-4
32. Please file your term loan agreement with OrbiMed Royalty & Credit
Opportunities III,
LP, OrbiMed Royalty & Credit Opportunities IV, LP, and Braidwell
Transaction
Holdings LLC as an exhibit to the registration statement. Refer to Item
601(b)(10) of
Regulation S-K.
General
33. We note the gatefold graphics with photos of laboratories and buildings
and the caption,
"Caris Life Sciences . . . Where Molecular Science Meets Artificial
Intelligence." Please
clarify whether these photographs identify your current operations,
employees and
equipment, and explain how they are representative of your business. We
also note the
graphic illustrating case volume growth. Please revise the graphic to
substantiate the
suggestion implied by the arrow pointing upwards, that your case volume
will grow both
for clinical cases and biopharma and external research cases in the
future. Finally, please
revise your "By the Numbers" graphic to further explain the terms
included in relation to
July 5, 2024
Page 8
the numerical values.
34. We note the use of various industry terms in the prospectus. Please
consider including a
glossary or defining the industry terms in the first instance of their
use in the prospectus.
35. Please provide us with supplemental 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,
have presented or expect to present to potential investors in reliance
on Section 5(d) of the
Securities Act, whether or not you retained, or intend to retain, copies
of those
communications.
Please contact Tayyaba Shafique at 202-551-2110 or Michael Fay at
202-551-3812 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Juan Grana at 202-551-6034 or Lauren Nguyen at 202-551-3642 with any
other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Industrial Applications and
Services
cc: Alison Haggerty, Esq.