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September 6, 2024
Stephen Yoder
Chief Executive Officer
Pieris Pharmaceuticals, Inc.
225 Franklin Street, 26th Floor
Boston, MA 02110
Re: Pieris Pharmaceuticals, Inc.
Registration Statement on Form S-4
Filed August 9, 2024
File No. 333-281459
Dear Stephen Yoder:
We have reviewed your registration statement and have the following
comments.
Please respond to this letter by amending your registration statement
and providing the
requested information. 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 any amendment to your registration statement and the
information you
provide in response to this letter, we may have additional comments.
Registration Statement on Form S-4
Questions and Answers About the Merger, page 1
1. Please revise your Q&A disclosure, where appropriate, as follows:
Clarify the material terms of the CVR Agreement, your intentions
with respect to
Pieris' pre-merger assets and describe any material assets that
either have been
divested or may be divested by Pieris pursuant to the CVR Agreement.
With reference to your disclosure on pages 9 and 215, please revise
the Q&A and
Summary to highlight, if true, that if the merger is completed, the
combined company
will focus on developing Palvella's product candidates, and it is
anticipated that the
combined company will not continue to develop any of Pieris' legacy
product
candidates.
Also, revise the Q&A to explain what Pieris' stockholders will
receive in the merger
to provide context for your disclosure on page 8 discussing the tax
treatment of the
CVRs.
September 6, 2024
Page 2
What is the PIPE Financing?, page 2
2. We note your disclosure that the PIPE Investors have agreed to subscribe
for and purchase
(in cash or by cancellation of convertible notes) either shares of
Pieris common stock or
pre-funded warrants to purchase shares of the combined company common
stock. Here
and throughout where appropriate, please revise to quantify the amount
of the expected
$78.9 million gross PIPE proceeds to be received in cash versus the
amount expected to
be attributed to the conversion of outstanding Palvella convertible
notes.
How many votes can be cast by all stockholders?, page 4
3. We note your disclosure that on the record date the holder of one
outstanding share of
Series F Preferred Stock will be entitled to be entitled 25,000,000
votes only on Proposal
No. 2 related to increasing the number of authorized shares of Pieris
common stock, to be
voted together with the holders of Pieris common stock as a single
class.
Consistent with your disclosure page 57 and in your 8-K dated August
8, 2024
incorporated by reference, please revise the Q&A to disclose that on
August 7, 2024,
Pieris entered into a Subscription and Investor Representation
Agreement with James
Geraghty, the chairman of the Pieris board of directors, pursuant to
which he
purchased one share of Pieris Series F Preferred Stock for $1.00
cash.
Consistent with your disclosure on page 206, explicitly state that
the issuance of the
Series F Preferred Stock, with its attendant voting rights, was
issued by the Company
solely to affect the passage of Proposal 2, which is a condition to
the completion of
the Merger. Explain the reason(s) why the Board determined that such
issuance was
necessary in this case.
4. Please revise your disclosure to explicitly describe the impact of the
outsized voting rights
the holder of the Series F Preferred share will have on Proposal 2
relative to holders of
common stock. In this regard:
Please consider including an illustrative example of the effects the
super voting rights
of the Series F Preferred Stock will have on reaching the voting
threshold necessary
to approve Proposal 2. Based on the number of Pieris common shares
reported
outstanding in the proxy statement and assuming (1) the common
shares subject to the
Pieris Support Agreement and (2) the Series F Preferred share are
each voted as
described in the proxy statement, please clarify the number of votes
that will need to
be cast (i.e., the number of common shares that will need to be
voted) to approve
Proposal 2.
If true, please revise to clearly explain that the mirrored voting
mechanism of the
Series F Preferred Stock will have a significant impact on the vote
needed to pass
Proposal 2. For example, assuming the minimum quorum is met with no
additional
shares of common stock appearing in person or by proxy, disclose
whether and if so
how the mirrored voting mechanism of the Series F Preferred Stock
will operate with
respect to the percentage of the common shares outstanding required
to vote to pass
Proposal 2.
Clearly explain the consequence to holders of Pieris' common stock
of not casting a
vote on a common share for or against the proposal in person or by
proxy. In this
September 6, 2024
Page 3
regard, please state the likelihood that even if a Pieris' common
shareholder does not
vote on the proposals, Pieris will reach or exceed the voting
threshold required for
approval of Proposal 2.
Palvella Therapeutics, Inc., page 9
5. Please revise the Summary and throughout where appropriate to clarify
the status of
Palvella's ongoing and planned clinical trials. In this regard:
Clarify if references on page 10 and elsewhere to Palvella's
"planned" Phase 2
baseline-controlled trial of QTORIN Rapamycin for the treatment of
CVM expected
to start in Q4 2024 are separate from references to the Phase 2
baseline-controlled
trial Palvella "is conducting," with top-line data expected in Q4
2025. Also revise to
clarify when you submitted, or plan to submit, an IND for the
planned trial for the
CVM indication.
Similarly, reconcile your disclosure on page 10 and elsewhere that
"Palvella currently
has one ongoing clinical trial and one clinical trial planned to
start" with disclosure on
page 226 that "QTORIN rapamycin is currently being evaluated in
three ongoing
clinical trials."
In light of your risk factor disclosure on page 73, also disclose
the location(s) of
Palvellas completed, ongoing and planned clinical trials.
6. Please revise the Summary and throughout where appropriate to eliminate
any implication
that Palvella's product candidates have been or will ultimately be
determined safe and/or
effective or have demonstrated safety and/or efficacy for purposes of
approval by the
FDA or comparable regulatory agency. Where you deem appropriate, you may
present
objective data without including your conclusions related to safety or
efficacy. By way of
example and not limitation, refer to the following:
Statements that Palvella has announced "positive" or "encouraging"
topline Phase 2
clinical trial results. (pages 10, 221, 229 and 264)
Statements that "Palvella is developing the first approved therapy"
for microcystic
LM and CVM. (pages 226 and 233)
7. Please revise the Summary and Palvella's Business section to provide
context and balance
to the discussion of Palvella's proprietary QTORIN platform. To the
extent that you
highlight Palvella's intention to leverage its "versatile" QTORIN
platform to expand its
pipeline to treat a "broad spectrum" of rare, genetic skin diseases,
please include equally
prominent disclosure highlighting, if true:
that Palvella has limited experience in therapeutic discovery and
development;
Palvella's platform is novel and unproven, and that clinical
evidence to support the
two current clinical-stage QTORIN product candidates is preliminary
and limited at
this time;
prior candidates developed using the QTORIN platform targeting
different indications
have failed to meet their respective primary endpoints, which may
affect Palvella's
ability to conduct clinical programs for other QTORIN-based product
candidates; and
the platform may never result in the regulatory approval of any
product candidate.
September 6, 2024
Page 4
8. Please revise your disclosure regarding Palvella's product candidates to
clarify discuss the
material factors that could delay or prevent Palvella's ability to
receive marketing
approval. Highlight the novel and/or subjective clinical endpoints and
the "baseline
control" Palvella has established in connection with its Phase 3 trial
design in microcystic
LM, and disclose that the FDA has made comments to Palvella indicating
it could request
a placebo-controlled trial or additional trials to assess different
clinical endpoints. In this
regard, we refer to your disclosure on pages 62, 66 and 71.
9. Please revise the Summary and Business sections to explicitly disclose
that Palvella
currently plans to pursue marketing approval for QTORIN rapamycin for
microcystic LM
and other indications through the FDA s Section 505(b)(2) pathway.
Briefly explain the
steps necessary to achieve FDA approval using this process, and
highlight those steps that
still remain to be completed.
Prospectus Summary
Pieris Pharmaceuticals, Inc., page 9
10. Please revise to disclose the remaining portion of the $7.5 million of
severance costs that
Pieris expects to be paid through the end of 2024.
PIPE Financing, page 11
11. It appears that the shares to be sold in the PIPE Financing are included
in the shares to be
registered on this registration statement. You disclose in the second
paragraph of this
section and elsewhere that the investors in the PIPE Financing made
their investment
decision in a private offering; therefore, the sale must close
privately.
With reference to Exhibit 107 (Filing Fee Table), please remove from
this registration
statement the (1) 3,154,241 of shares of Pieris common stock and
(2) up to 2,592,585
shares of Pieris common stock issuable upon the exercise of
Pre-Funded Warrants to
the PIPE Investors in connection with the PIPE Financing, or
otherwise advise.
Disclosure in the penultimate sentence in the second paragraph
should seemingly
refer to a resale registration statement on Form S-1 to be
consistent with the
Registration Rights Agreement included in Annex L. Please review
and reconcile as
appropriate.
Support Agreements, page 16
12. With respect to your discussion of the support agreements on pages 17
and 175, you state
that the Palvella stockholders that are party to a support agreement
with Pieris
"include" all executive officers and directors of Palvella and "certain
other stockholders
owning 5% or more of the outstanding shares of Palvella capital stock."
In this regard,
please show us how the percentages of securities owned by the Petrichor
Opportunities
Fund I LP, Petrichor Opportunities Fund I Intermediate LP, and Agent
Capital Fund I,
LP. are reconcilable to the principal stockholder table on page 321.
Otherwise confirm, if
true, that only Palvella executive officers, directors, affiliates,
founders and their family
members, and holders of 5% or more of Palvella voting equity securities
are subject to the
support agreement.
September 6, 2024
Page 5
Pieris may be treated as a "public shell" company..., page 32
13. Please revise this risk factor to remove the qualifying phrase "may be
treated" and instead
disclose the risks attendant to the conclusion, disclosed on pages 20
and elsewhere
throughout, that Pieris was "determined to be a shell company in that it
did not meet the
GAAP definition of a business, did not have more than nominal assets,
and does not have
more than nominal operations at the time of the merger," or otherwise
advise. Similarly,
revise the following sentence in risk factor disclosure on page 36:
"Furthermore, if Pieris
is deemed to be a shell company, the baby shelf rules, and therefore its
Form S-3, would
not be available to Pieris." Refer to footnote 943 of the Special
Purpose Acquisition
Companies, Shell Companies, and Projection adopting release (Release
Nos. 33-11265;
34-99418; IC-35096), available at
https://www.sec.gov/files/rules/final/2024/33-
11265.pdf.
Risks Related to Palvella, page 58
14. Please tell us your consideration of including risk factor disclosure
concerning the clinical
trial risks associated with pediatric trials. We note that based on your
disclosure on page
235, Palvella intends to enroll patients aged 6 years or older in its
planned Phase 2 clinical
trial of QTORIN rapamycin in cutaneous venous malformations in the 4th
quarter of
2024. We also note your disclosure on page 229 that toxicities have
limited the use of oral
rapamycin for the treatment of LM patients, particularly for pediatric
and adolescent
patients.
The articles of incorporation of the combined company will generally
provide..., page 109
15. We note that the articles of incorporation of the combined company will
identify the
Eighth Judicial District Court of Clark County, Nevada as the exclusive
forum for certain
litigation, including any derivative action. Please disclose whether
this provision will
apply to actions arising under the Securities Act or Exchange Act and,
if so, make
conforming revisions in your related risk factor disclosure. In this
regard, we note that
Section 27 of the Exchange Act creates exclusive federal jurisdiction
over all suits
brought to enforce any duty or liability created by the Exchange Act or
the rules and
regulations thereunder, and Section 22 of the Securities Act creates
concurrent jurisdiction
for federal and state courts over all suits brought to enforce any duty
or liability created by
the Securities Act or the rules and regulations thereunder. If the
provision applies to
Securities Act claims, please also revise your disclosure to state that
investors cannot
waive compliance with the federal securities laws and the rules and
regulations
thereunder. If this provision does not apply to actions arising under
the Securities Act or
Exchange Act, please ensure that the exclusive forum provision in your
bylaws states this
clearly, or tell us how you will inform investors in future filings that
the provision does
not apply to any actions arising under the Securities Act or Exchange
Act.
The Merger
Background of the Merger, page 119
16. Please revise throughout this section to disclose when and why any
potential reverse
merger candidate was eliminated from consideration. By way of example
only, we note
that the September 5, 2023 entry does not explain Pieris' reason(s) for
reversing its prior
determination on August 24, 2024 to advance one candidate. Similarly, to
the extent
September 6, 2024
Page 6
known, revise throughout to disclose any material reason(s) why any
potential reverse
merger candidate withdrew itself from consideration.
17. You disclose that on October 2, 2023, Pieris' Board decided to advance
three candidates,
one of which was Company A, into the third and final round of diligence.
You also
disclose that on October 4, 2023, one of the third-round candidates
withdrew from the
process. Notwithstanding, we note that certain subsequent entries, such
as those dated
October 31, 2023 and November 9, 2023, refer to "the remaining three
candidates" as of
those dates. Please reconcile or advise.
18. Please revise your disclosure throughout this section to provide greater
detail as to how
the material terms of the transaction structure and consideration
evolved during
the negotiations between Pieris and Palvella through proposals and
counter-proposals.The
disclosure should provide shareholders with an understanding of how,
when, and why the
material terms of your proposed transaction evolved and why this
transaction is being
recommended as opposed to any alternatives. Please specifically address
:
the acceleration of Pieris options and restricted stock units;
contingent value rights to be issued to pre-merger Pieris
stockholders;
the valuations of the parties, including any amount ascribed by
Palvella to Pieris in
excess of its ending net cash position and the reason(s) therefor;
the equity allocations in the combined company via the contemplated
exchange ratio;
the structure of the combined company's board of directors and
management;
support and lockup agreements; and
the PIPE financing.
19. We note your disclosure regarding discussions between Pieris and
Palvella
regarding Palvella s clinical trial design for QTORIN rapamycin. In
this regard:
Please revise the April 3, 2024 entry to explain in greater detail
the questions Pieris'
Board posed to Palvella's management "on the valuation analysis and
matters related
to Palvellas's clinical development plan." Disclose the substance of
any subsequent
discussions after Palvella's presentation at that meeting.
Similarly, revise the entries between May 3 and May 14, 2024 to
explain the
additional information that Pieris' management "was continuing to
request...regarding
the Phase 3 clinical trial design for [Palvella's] QTORIN rapamycin
in microcystic
LM" and why, including with respect to how any information provided
in response
was considered.
Describe any material discussion related to "the FDA and S&T
committee feedback
on Palvella's planned Phase 3 clinical trial design for QTORIN
rapamycin," including
whether and if so how such discussions impacted the proposed terms
of the LOI or
the Transaction Committee's decisions to authorize Pieris management
to enter into
the LOI with Palvella.
September 6, 2024
Page 7
Summary of Material Financial Analyses, page 139
20. Please revise this section as follows:
Briefly explain why oncology and platform companies, and IPOs of
such companies
otherwise meeting the comparable public company selection criteria
were excluded
from the analysis.
Disclose the underlying judgments and assumptions Stifel made in
conducting
its various analyses and the conclusions of its analyses relative to
Palvella, including
how the results of each analysis formed the basis for selecting an
implied enterprise
value reference range for Palvella.
Certain Unaudited Financial Projections of Palvella, page 142
21. You disclose on page 141 that Stifel used financial forecasts of
Palvella for the second
half of calendar year 2024 through calendar year 2040 to perform its
analyses. As such,
please revise the Palvella Projections summary table on page 144 to
include the complete
projections as prepared by Palvella management through that date.
22. We note the disclosure on page 142 that the projections prepared by
Palvella management
pertained to the "business, operations, earnings, cash flow, assets,
liabilities and prospects
of Palvella." You also state on page 144 that the Palvella Projections
include financial
measures including EBIT, yet there is no such corresponding line item in
the summary
table. To the extent not already disclosed, please revise to include all
material information
that was provided to and considered by the Pieris board of directors in
connection with its
evaluation of the Merger and used or relied upon by Stifel in rendering
its fairness
opinion.
23. Please disclose the nature of, and the bases for, any material
assumptions that underlie the
line items presented, or to be presented, in the summary table on page
144. Ensure the
level of detail provided is sufficient for investors to evaluate and
understand the
reasonableness of the assumptions, uncertainties and/or contingencies
underlying the
projections as well as the inherent limitations on the reliability of
projections.
24. You note on page 143 that the financial projections cover multiple
years, and that this
information by its nature becomes subject to greater uncertainty with
each successive
year. With respect to the length of the projections, please:
Disclose the basis for projections beyond year five, including if
the forecasts reflect
more than simple assumptions about growth rates.
Where appropriate, explain how Pieris management and the Board
considered the
financial projections and how, if at all, they determined that they
are reasonable,
particularly in light of the extensive length of the forecasts and
since Palvella is a
clinical stage company with limited operations and no approved
products.
Interests of Pieris Directors and Executive Officers in the Merger, page 144
25. We note your disclosure regarding the calculation of Pieris' net cash
beginning on page
149 and your disclosures throughout that under certain circumstances the
ownership
percentages in the combined company may be adjusted up or down depending
on the
amount of Pieris net cash as of closing. Please revise this section and
elsewhere as
appropriate to explain any material payments to Pieris' executives, such
as
September 6, 2024
Page 8
golden parachute compensation that is based on or otherwise
relates to the Merger, that
will be excluded from the calculation of net cash at the
determination time. Disclose the
types and aggregate amounts of such payments and explain the impact to
other Pieris
stockholders.
Intellectual Property, page 218
26. We note your disclosure on page 218 relating to Pieris' patent
portfolio. On an individual
or patent family basis, please revise to clearly disclose:
the number of patents and patent applications, separately;
whether each is owned or licensed;
the specific products, product groups and technologies to which such
patents or patent
applications relate;
the type of patent protection grated or sought;
the expiration date; and
the jurisdiction covered by each patent.
In this regard, it may be useful to provide this disclosure in tabular
form to support the
narrative already included. Please also make similar revisions in the
section related to
Palvella's intellectual property on page 239.
Pieris' Business
Strategic Partnerships, page 219
27. You disclose that Pieris may continue to explore other partnerships or
arrangements to
license out its legacy assets and intellectual property, including
PRS-400 and PRS-220.
Here, in the Q&A, and elsewhere throughout if true, please clearly state
that Pieris has not
identified third party partners or arrangements for these assets, has
not set any milestones
for such legacy assets, and that it is uncertain whether it will do so.
Please also clearly
state that Pieris shareholders will not be able to determine the value
of the CVRs, if any,
prior to voting on the Merger since a portion of the consideration will
be contingent upon
the occurrence of future events.
Strategic Partnerships, page 219
28. Please revise your disclosure to include a discussion of all material
terms of Pieris' license
and collaboration agreements, including but not limited to:
Nature and scope of intellectual property transferred;
Each parties rights and obligations;
Duration of agreement and royalty term;
Term and termination provisions; and
Payment terms. In this regard, quantify any upfront fees, amounts
paid to date,
aggregate potential milestone payments segregated by development and
commercial
milestone payments, and the applicable royalty rates to be paid by
each party. In the
event a range is provided in place of the actual royalty rate, such
range should be
within ten percentage points.
September 6, 2024
Page 9
Palvella's QTORIN Platform, page 223
29. We note that a key element of Palvella's strategy is to leverage its
QTORIN platform to
generate additional product candidates that target rare genetic skin
diseases. Please
briefly describe the proprietary processes that you collectively refer
to as
Palvella's "platform." Explain how it was developed by Palvella's
research team and
how Palvella has utilized and plans to utilize this platform to execute
its strategy.
30. In light of Palvella's development stage, revise to qualify and/or
explain the basis for the
following statements that the QTORIN platform:
"will enable [Palvella] to generate new product candidates while
minimizing the
challenges and timelines typically associated with formulation
development
activities;" and
"would expand the range of indications for which novel,
life-changing therapies may
be created...to address the needs of hundreds of thousands of
patients with genetic
skin diseases who have no FDA approved therapies for their
disease."
Additionally, please address the numerous references to the scalable
nature of Palvella's
platform. If the scalability of the platform is currently aspirational,
please so state.
QTORIN Rapamycin for the Treatment of Microcystic LM, page 226
31. We note your disclosure on page 229 that Palvella has initiated a
"pivotal" Phase 3 trial to
evaluate QTORIN rapamycin in patients with microcystic LM. In this
regard:
Please revise to briefly describe what you mean by "pivotal," and
explain the
Company's strategy to use such a pivotal study to seek regulatory
approval in the
context of the Section 505(b)(2) regulatory pathway. Explain the
basis for
Palvella's belief, if any, that the FDA has agreed or will agree
that the pivotal
study may be sufficient for the approval of the commercialization of
QTORIN
rapamycin for microcystic LM.
In light of your risk factor disclosure on page 70, explain the
basis for
Palvella's belief, if any, that the FDA has agreed or will agree
that its Phase 3 pivotal
study may be sufficient for the approval of the commercialization of
QTORIN
rapamycin for microcystic LM. Explain Palvella's rationale for
planning to bridge
QTORIN rapamycin and the approved oral rapamycin product based on
crosstudy
comparison between pharmacokinetic data from the prescribing
information for the
approved product. As applicable, explain whether and if so why
Palvella's bridging
strategy may be susceptible to objection.
Your revisions should make clear what further trials or testing is
or may be required.
To the extent that the FDA could require additional bridging
studies, please explain
what a "relative bioavailability study" is and how one differs from
traditional efficacy
trials.
32. Similarly, in light of your risk factor disclosure on pages 62 and 66,
please revise
Palvella's business section in the appropriate place(s) to disclose
prior comments or
recommendations the FDA has provided to Palvella with respect to key
clinical trial
design features of the Phase 3 trial of QTORIN rapamycin for the
treatment of
microcystic LM, including with respect to its selection of novel
endpoints and choice of
control, and when such feedback was provided. Also explain Palvella's
rationale
September 6, 2024
Page 10
for employing a dynamic assessment that uses a comparative rating scale
as the primary
endpoint and selecting a baseline control rather than a placebo control,
as well as the
potential outcomes if the FDA ultimately disagrees with Palvella's trial
design or
interpretation of trial results.
33. You disclose on page 226 that Palvella intends to rely on the FDA's
conclusions of safety
and efficacy from its review of the reference sponsor's studies of
reference drug
RAPAMUNE, along with Palvella generated data, to support approval. In
this regard,
please identify and describe the reference studies and results you
intend to rely on,
including the identification of the parties that performed the studies.
34. We note that Palvella commissioned a primary market research study in
May 2024 that
surveyed 52 dermatologists and hematologists with respect to the
potential market
opportunity for QTORIN rapamycin in microcystic LM. Please revise Figure
7 to
summarize only objective data from that study, and remove the
subjective, unattributed
quotes in the rightmost column.
PALV-06 Phase 2 Pharmacokinetic and Safety/Tolerability Results, page 232
35. You state as follows on page 232: "Safety data obtained in the PALV-06
[Phase 2] trial
was similar to that observed in larger clinical studies of QTORIN
rapamycin." Please
revise to clarify which larger clinical studies you refer to.
Potential Market Opportunity and Market Research, page 232
36. You disclose Palvella's belief that QTORIN repamycin, if approved, has
significant
commercial potential for microcystic LM "in the U.S. and other markets."
Please revise to
disclose whether the estimate that the total addressable market
opportunity on an
annualized basis is greater than $1 billion is based on the estimated
U.S. prevalence of
over 30,000 diagnosed patients.
General
37. Please provide the opinion of counsel as to:
Whether the vote taken including votes represented by the Series F
Preferred will be
valid under Nevada law; and
The legality under Nevada law of the redemption of the share of
Series F Preferred by
Pieris upon the earlier to occur of: (i) the order of the Pieris
board of directors in its
sole discretion and (ii) automatically and effective immediately
after the effectiveness
of the increase in the number of authorized shares of Pieris common
stock proposed
in Proposal No. 2.
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.
September 6, 2024
Page 11
Please contact Gary Newberry at 202-551-3761 or Vanessa Robertson at
202-551-3649 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Lauren Hamill at 303-844-1008 or Laura Crotty at 202-551-7614 with any
other
questions.
Sincerely,
Division of
Corporation Finance
Office of Life
Sciences
cc: Joseph Walsh