View:
United States securities and exchange commission logo
January 19, 2024
Paul Alloway, Ph.D.
President and Chief Operating Officer
Homology Medicines, Inc.
One Patriots Park
Bedford, MA 01730
Re: Homology Medicines,
Inc.
Registration
Statement on Form S-4
Filed December 18,
2023
File No. 333-276093
Dear Paul Alloway:
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 Filed December 18, 2023
Cover Page
1. Please revise the
Letter to Stockholders to prominently disclose, if true, whether the listing
approval for Q32's
securities on NASDAQ is a closing condition of the merger.
2. Please revise the
Letter to Stockholders to disclose the valuations assigned to Homology
and Q32 for purposes of
this merger.
Questions and Answers, page 2
3. Please revise this
section, where appropriate, as well as the Prospectus Summary, to
disclose Homology's net
cash as of the most recent practicable date and briefly describe
the factors that could
affect Homology's net cash between this date and the closing date of
the merger.
Paul Alloway, Ph.D.
FirstName
Homology LastNamePaul
Medicines, Inc.Alloway, Ph.D.
Comapany
January 19,NameHomology
2024 Medicines, Inc.
January
Page 2 19, 2024 Page 2
FirstName LastName
What is the Merger?, page 2
4. Please revise to disclose and, if necessary, explain the Exchange
Ratio.
What are the CVRs being issued to Homology stockholders?, page 5
5. With reference to Exhibit 10.5, please revise this Q&A or add a new
one to explain that
Q32 must use commercially reasonable efforts to sell the legacy assets
and discuss the
level of efforts and resources required.
Prospectus Summary , page 13
6. Please shorten the ADX-097 pipeline arrow given that the Phase 1
appears to be on-going.
7. Please revise to remove the final candidate from the table. In this
regard, we note that
both the discovery phase program and the indication are unidentified.
8. Please revise your pipeline table to include the information for
footnote 2 or advise.
Opinion of Homology's Financial Advisor, page 17
9. Please revise to explain why Homology s Board sought a fairness
opinion concerning the
$195 million Q32 Equity Value as opposed to one that addressed the
fairness of the
Merger exchange ratio. Revise to clarify, if true, that the advisor
did not assess whether
the $80 million Homology Equity Value of Homology was fair from a
financial point of
view to the Homology stockholders. Discuss how Homology s Board
assessed this
valuation in rending its recommendation to shareholders.
Following the Merger, the combined company may be unable to integrate
successfully..., page 36
10. Please reconcile this risk factor disclosure with your disclosure on
page 2 and elsewhere
indicating that the business of Q32 will continue as the business of
the combined
company.
Homology is currently subject to securities class action litigation..., page 77
11. Please revise to address whether future damages in excess of insurance
coverage will be
borne by the combined company and its shareholders. In this regard,
clarify whether
damage awards could impact CVR payments.
Background of the Merger, page 153
12. Please revise your disclosure on page 154 to explain the basis on
which Homology
narrowed the field down to the 6 initial bidders. Also describe what
factors the Homology
board took into consideration in selecting Q32 as the lead potential
counterparty.
13. Please revise to discuss the negotiations and revisions relating to
the CVRs, including
those pertaining to the definition of commercially reasonable efforts.
It should be clear
Paul Alloway, Ph.D.
Homology Medicines, Inc.
January 19, 2024
Page 3
how the terms evolved over time and the positions of the two parties.
14. Please revise the October 16 entry to identify the items included in
the supplemental
request.
15. With reference to the October 12 and November 9 entries, please revise
to explain the
material changes to the Q32 financial models during the course of the
negotiations.
Please revise to discuss what consideration the Homology Board gave to
negotiating the
$195 million Q32 Equity Value downward in light of Q32 s inability
to identify sufficient
demand to pursue a $75 million PIPE financing led by its current
investors.
Financial Analyses, page 169
16. Please revise your disclosure regarding TD Cowen's DCF analysis to
disclose why cash
flows for a 26-year period were used instead of a shorter period.
Certain Unaudited Financial Projections for Q32, page 171
17. Please revise page 173 to also present the unadjusted projections that
Q32 s management
provided to Homology.
Material U.S. Federal Income Tax Consequences of the Merger, page 220
18. Please revise to add a section that discusses the material tax
consequences of the Merger
to the Homology stockholders, or advise. With reference to Staff Legal
Bulletin No. 19,
please provide a tax opinion of counsel, as applicable.
Matters Being Submitted to a Vote of Homology Stockholders, page 233
19. We note your disclosure in Proposal No. 3 stating that you are
proposing an amendment to
the Restated Certificate of Incorporation to give the Homology s
board of directors
discretionary authority to effect a Reverse Stock Split of Homology
s issued and
outstanding common stock. Please revise to disclose the range of this
reverse stock split.
Further, to the extent that any such reverse stock split is expected
to occur prior to the
effectiveness of your registration statement, all share data will
require retroactive
adjustment pursuant to SAB Topic 4.C.
Q32's Business, page 305
20. Please revise your disclosure to provide a narrative description
explaining the results in
the graphs on page 311 so it is clear how the results support the
claims in this section.
Future Funding Requirements, page 378
FirstName LastNamePaul Alloway, Ph.D.
21. With reference to the pro forma balance sheet on page 401, please revise
to discuss the
Comapany NameHomology
combined company s Medicines,
plans for theInc.
funds it will hold post-merger,
including the
Januaryapproximate amount
19, 2024 Page 3 intended for each purpose.
FirstName LastName
Paul Alloway, Ph.D.
FirstName
Homology LastNamePaul
Medicines, Inc.Alloway, Ph.D.
Comapany
January 19,NameHomology
2024 Medicines, Inc.
January
Page 4 19, 2024 Page 4
FirstName LastName
Unaudited Pro Forma Condensed Combined Financial Information
Notes to the Unaudited Pro Forma Condensed Combined Financial Information
1. Description of the Transaction, page 404
22. We note your disclosure that the number and value of the shares of
Homology common
stock and options to purchase Homology common stock to be held by
Homology
stockholders to be outstanding following the Merger and the fair value
of the CVRs will
not be determined until the completion of the Merger and therefore,
the final aggregate
value of the consideration paid in the Merger may be more or less than
$45.3 million. We
further note that the ownership percentages are subject to adjustment
to the extent that
Homology's net cash of the closing is less than $59.5 million or
greater than $60.5 million.
Please tell us your consideration of including a sensitivity analysis
of the merger
consideration.
Unaudited Pro Forma Condensed Combined Financial Information
Notes to the Unaudited Pro Forma Condensed Combined Financial Information
4. Pro Forma Adjustments, page 407
23. We note your disclosure in Note H stating, "The estimated fair value
of the CVR is $14.3
million, which is the fair value of the estimated cash dividend
expected to be paid."
Please expand your disclosure to explain how this amount was
determined.
General
24. With reference to your disclosures concerning the current status of
Homology Medicines,
Inc. s operations, the plans for those operations, and the pro forma
accounting treatment
for Homology Medicines' assets and liabilities on page 404, please
provide us an analysis
concerning whether Homology Medicines is a shell company as defined in
Rule 12b-2 of
the Exchange Act or whether it could become one prior to Closing. For
guidance, see Use
of Form S-8, Form 8-K, and Form 20-F by Shell Companies, Release No.
33-8587 (July
15, 2005) at n. 32 as reiterated in Special Purpose Acquisition
Companies, Shell
Companies, and Projections, Release No. 33-11048 (March 30, 2022) at
n. 239 and
accompanying text.
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.
Paul Alloway, Ph.D.
Homology Medicines, Inc.
January 19, 2024
Page 5
Please contact Tracie Mariner at 202-551-3744 or Angela Connell at
202-551-3426 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Cindy Polynice at 202-551-8707 or Joe McCann at 202-551-6262 with any
other
questions.
Sincerely,
FirstName LastNamePaul Alloway, Ph.D.
Division of
Corporation Finance
Comapany NameHomology Medicines, Inc.
Office of Life
Sciences
January 19, 2024 Page 5
cc: Lisa Martin, Esq.
FirstName LastName