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September 25, 2018
D. Victor Perlroth, M.D.
Chairman and Chief Executive Officer
Kodiak Sciences Inc.
2631 Hanover Street
Palo Alto, CA 94304
Re: Kodiak Sciences Inc.
Amendment No. 2 to Registration Statement on Form S-1
Filed September 24, 2018
File No. 333-227237
Dear Dr. Perlroth:
We have reviewed your amended 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. Unless
we note
otherwise, our references to prior comments are to comments in our September
14, 2018 letter.
Correspondence filed on September 14, 2018
March 16, 2018 Valuation, page 4
1. You state on page 5 of your response that in performing a DCF-based
valuation of the
February 2018 convertible notes as of the date of financing, you
determined that the cash
proceeds from the convertible notes had an implied discount rate of
57.5%, for which you
based the 55% discount rate used in determining the valuation of your
common stock.
Please address the following:
Tell us how you determined the convertible notes had a 57.5% discount
rate and why
the discount was attributed solely to the issuances of the note,
D. Victor Perlroth, M.D.
FirstName LastNameD. Victor Perlroth, M.D.
Kodiak Sciences Inc.
Comapany 25, 2018
September NameKodiak Sciences Inc.
September 25, 2018 Page 2
Page 2
FirstName LastName
Tell us whether or not the notes were to an unrelated party,
Confirm that there were no other contemporaneous agreements at or
around the time
of the agreement, and
Tell us why you believe use of the 55% discount rate is
appropriate in determining the
valuation of your common stock.
2. You state that under the IPO scenario you used an average of pre-money
market
capitalization of 35 comparable companies in the preclinical, first,
and second stages of
development with an IPO date between July 2010 and December 2017.
Please address the
following:
Tell us why you believe the 35 companies are comparable to your
business and why a
smaller sample of companies more similar to your size, stage of
development, number
of product candidates, and type of product candidates would not
provide a more useful
comparison,
Explain why use of the average of pre-money market capitalization
for a vast number
of companies is appropriate, and
Tell us why it is appropriate to base your valuation on IPOs that
went effective dating
back to July 2010.
3. You stated on page 83 of the S-1 filed September 11, 2018 that the
fair value of the
options granted is recognized over the period during which an optionee
is required to
provide services. Please tell us what the vesting period is for each
option granted.
4. You state on page 4 of your response that for the March 16, 2018
valuation, under the IPO
scenario the estimated enterprise value was allocated to the equity
and equity-linked
securities using a waterfall/common stock equivalent method. This
method is otherwise
known as the current value method. Explain to us why you believe this
method was
appropriate when you were considering an IPO and had filed a draft
registration statement
on February 14, 2018. In addition, the company's methodology discussed
on page 4 of the
correspondence appears inconsistent with the methodology discussed on
page 84 of the
Form S-1/A filed on September 11, 2018, which states that you
determined that a hybrid
approach of the OPM and PWERM methods was the most appropriate method
for
allocating enterprise value to determine the estimated fair value of
your common stock.
Please revise your methodology or tell us why you believe no revision
is necessary.
Summary, page 7
5. Based on your disclosure on page 78 of your S-1 filed September 11,
2018, it appears the
February 2018 convertible notes convert at a discount to the IPO
price. In light of the
pending registration statement, please address the following:
Tell us if you intend to record a beneficial conversion feature for
the discount, and if
not, why,
D. Victor Perlroth, M.D.
Kodiak Sciences Inc.
September 25, 2018
Page 3
Provide us the amount, calculation, and timing thereof of any
discount to be recorded,
and
Tell us your consideration of disclosing the amount in your Form S-1.
Amendment No. 2 to Form S-1
Overview, page 1
6. We note the revisions that were made on page 5 in response to comment 1.
Please make
similar revisions to page 1 where you disclose that you successfully
reached the primary
safety and tolerability endpoint of the study. Please also clarify
whether the Phase 1b
study and Phase 2 clinical trials will commence prior to the end of the
12-
week safety follow-up period.
Ongoing and Planned Clinical Development, page 2
7. We note the disclosure added to page 2 regarding the need for one
additional confirmatory
study for each of wet AMD and DR/DME prior to approval. Please revise
your disclosure
to clarify whether these confirmatory studies will be Phase 3 studies,
how long each study
will take and whether the Phase 2 clinical trials must be successfully
completed before
such studies can commence. Additionally, revise your chart to ensure that
all future trials
required prior to seeking FDA approval are depicted in the table,
including all phase 3
trials.
You may contact Mary Mast at (202) 551-3613 or Lisa Vanjoske at (202)
551-3614 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Chris Edwards at (202) 551-6761 or Irene Paik at (202) 551-6553 with
any other
questions.
Sincerely,
FirstName LastNameD. Victor Perlroth, M.D.
Division of
Corporation Finance
Comapany NameKodiak Sciences Inc.
Office of Healthcare
& Insurance
September 25, 2018 Page 3
cc: Michael Nordtvedt
FirstName LastName