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United States securities and exchange commission logo
April 8, 2024
Erik Ostrowski
Interim Chief Executive Officer
AVROBIO, Inc.
100 Technology Square
Sixth Floor
Cambridge, MA 02139
Re: AVROBIO, Inc.
Amendment No. 1 to
Registration Statement on Form S-4
Filed March 25,
2024
File No. 333-277048
Dear Erik Ostrowski:
We have reviewed your amended 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.
Unless we note otherwise,
any references to prior comments are to comments in our March 12, 2024
letter.
Amendment No. 1 to Registration Statement on Form S-4 filed March 26,
2024
Cover Page
1. Given that the Nasdaq
listing condition is waivable, please further revise your disclosure
to indicate whether
recirculation or resolicitation of shareholders will occur prior to the
vote if the listing
application is not approved but the condition is waived.
What are the private financings?, page 2
2. We note your response
to prior comment 2, and your revised disclosure on page 3 and
elsewhere throughout
that the closing of the merger is conditioned upon the satisfaction or
waiver of the receipt
of cash proceeds not less than $114.5 million in connection with the
consummation of the
transactions contemplated by the private financings. As this closing
condition is waivable,
we reissue prior comment 2 in part. Please revise this Q&A, the
Erik Ostrowski
AVROBIO, Inc.
April 8, 2024
Page 2
summary risks and risk factors, and elsewhere as appropriate to
discuss risks and
uncertainties if stockholders are asked to make voting decisions
without knowing whether
the private financings will close in timely manner, or at all, and if
they do not close,
whether the minimum cash proceeds condition will be waived. Discuss
the combined
company s liquidity position and related risks in the event that the
merger closes without
the $114.5 million from the private financings in place.
Tectonic, page 15
3. We note your response to prior comment 28, which we reissue in part
with respect to your
revisions. In light of your disclosure on page 353 that Tectonic is in
the early stages of
using the GEODe platform to discover biologic drugs, please revise
conclusory statements
such as the following on pages 15 and 351, qualifying them as
appropriate to indicate if
such statements are currently aspirational or management's beliefs:
"These modifications have resulted in the ability to identify
improved molecules."
...the Tectonic team continues to evolve and modify aspects of the
platform for even
better results."
Interests of AVROBIO's Directors and Executive Officers in the Merger, page 22
4. We note your response to prior comment 10, which we reissue. As
referenced in
your response letter, the definition of Aspen Net Cash in the
Merger Agreement will
provide for certain exclusions from the calculation of net cash at the
determination time,
including but not limited to certain payments to AVROBIO s executives
such as the
unpaid cash cost of any change in control payments, severance payments,
bonus payments
or retention payments payable. Please revise this section and elsewhere
as appropriate to
disclose the types and aggregate amounts of any material payments to be
excluded from
net cash and explain the impact of such exclusion to other AVROBIO
stockholders. In this
regard, we note that disclosures throughout indicate (1) that under
certain circumstances,
the ownership percentages in the combined company may be adjusted up or
down
including, but not limited to, if AVROBIO s net cash at closing is
lower than
$64.5 million or greater than $65.5 million, (2) that AVROBIO management
currently
anticipates AVROBIO s net cash as of closing will be approximately
$65.0 million to
$75.0 million, and (3) the currently estimated ownership percentages are
based on an
assumption of $65.0 million in AVROBIO s net cash as of closing. Given
that you now
disclose on page 22 that executive officers may receive cash severance
payments with an
aggregate collective value of approximately $2.8 million, revise if true
to state whether
excluding such severance payments to executives from net cash at closing
could result in a
FirstName LastNameErik Ostrowski
downward adjustment to AVROBIO shareholders' equity allocation
post-merger.
Comapany NameAVROBIO,
Alternatively, Inc.the exclusion of approximately $2.8
million from the calculation
tell us why
April 8,of2024
net cash
Pageat2 the determination time should not be considered
material.
FirstName LastName
Erik Ostrowski
FirstName
AVROBIO,LastNameErik Ostrowski
Inc.
Comapany
April NameAVROBIO, Inc.
8, 2024
April 38, 2024 Page 3
Page
FirstName LastName
The Merger
Background of the Merger, page 175
5. We note your response to prior comment 22, which we reissue in part.
Your description of
the background of the Merger Agreement should be sufficient to explain
how the material
terms of the Merger Agreement were negotiated through proposals and
counter-proposals,
including which party proposed initial terms, which party requested
revised terms, and the
bases for doing so. Please further revise this section to explain how
the parties came to
agree upon the following material economic terms included in the final
Merger
Agreement:
the valuations of the parties, including the additional $12.5
million ascribed by
Tectonic to AVROBIO in excess of its ending net cash position;
the equity allocations in the combined company via the Exchange
Ratio contemplated
in the Merger Agreement; and
the concurrent private financings with Tectonic.
Opinion of Houlihan Lokey to the AVROBIO Board
Material Financial Analyses, page 208
6. We note your response to prior comment 24, which we reissue with
respect to the second
bullet. For each of the analyses discussed, please clarify what
value(s) were used to
calculate the implied value for Tectonic post-merger, and why. For
example, disclose
whether Houlihan Lokey use the mean, median, high or low value, or
some other value
from the calculations of the comparable companies/transactions.
Material U.S. Federal Income Tax Consequences of the Merger, page 225
7. We note your response to comment 6 and we re-issue the comment.
Mergers or exchange
transactions where the Company represents that the transaction is
tax-free, generally
involve material tax consequences and a tax opinion should be
provided. We note that
holders of Tectonic will be receiving registered shares of AVROBIO in
connection with
the merger, which will result in material tax consequences to such
investors. Please revise
to file an opinion of counsel with respect to the material tax
consequences of the merger.
Please refer to Section III of Staff Legal Bulletin 19.
AVROBIO's Management's Discussion and Analysis of Financial Condition and
Results of
Operations, page 390
Components of AVROBIO's Consolidated Results of Operations, page 392
8. We have read your response to comment 46. Please revise your
disclosures accordingly to
specifically address the reason(s) for the 25% increase in R&D
expenses for the Gaucher
program and the 33% increase in the Hunter program during 2023, given
especially the
explanation for the consolidated decreases on page 395 and that the
comprehensive review
resulting in your intention to halt development of your programs
occurred in July 2023. In
addressing this comment, we note certain information you have provided
in response to
Erik Ostrowski
FirstName
AVROBIO,LastNameErik Ostrowski
Inc.
Comapany
April NameAVROBIO, Inc.
8, 2024
April 48, 2024 Page 4
Page
FirstName LastName
comment 52 may be relevant.
Tectonics Notes to the Consolidated Financial Statements
3. Fair Value Measurements
Safe Liabilities, page F-47
9. You state that as of December 31, 2023 you determined the
probabilities of the occurrence
of an equity financing, public listing transaction and dissolution
used were 87.5%, 10.0%,
and 2.5%, respectively, which appears to differ from your disclosure
in the beginning of
the second paragraph of "Valuation of SAFE Liabilities" on page 417.
Please revise for
consistency throughout the filing, as applicable.
General
10. We acknowledge the information provided in your response to prior
comment 52. We do
not concur with the analysis and conclusion set forth in your response
letter. We
note your disclosure on pages 49, 177, and elsewhere indicating that
AVROBIO (1) sold
its cystinosis gene therapy program to Novartis in June 2023, (2)
halted further
development of its remaining gene therapy programs in July 2023 to
explore the
availability of one or more strategic transactions involving AVROBIO
and/or any of its
businesses or assets, and (3) in September 2023, terminated its
agreements with the
University of Manchester for the license and development of a gene
therapy for MPSII
(Hunter syndrome) and discontinued AVR-RD-05, a Hunter syndrome gene
therapy
program. We further note that if the merger is completed, (i) the
business of the combined
company will be focused on the development of Tectonic s product
candidates, and (ii)
that AVROBIO's pre-closing assets will be subject to a CVR Agreement
providing that
AVROBIO will use commercially reasonable efforts during the 18-month
period
following the closing to effect dispositions of AVROBIO s
pre-closing assets to a third
party that has delivered inbound interest. Please 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.
11. We note your disclosure that Tectonic stockholders owning
approximately 88% of the
Tectonic outstanding capital stock have entered into a voting
agreement whereby such
stockholders have agreed to vote in favor of the Merger and that such
stockholders will
execute a written consent providing for such approval following the
effectiveness of this
S-4 registration statement. Please confirm that, with respect to
Tectonic stockholders,
both (1) the voting support agreement was entered into only by
executive officers,
directors, affiliates and holders of 5% or more of Tectonic s voting
equity securities, and
(2) that Tectonic will solicit votes from stockholders who have not
signed the agreements
and would be ineligible to purchase in a private offering. Refer to
Securities Act Sections
Compliance and Disclosure Interpretations 239.13.
Please contact Jenn Do at 202-551-3743 or Mary Mast at 202-551-3613 if
you have
Erik Ostrowski
AVROBIO, Inc.
April 8, 2024
Page 5
questions regarding comments on the financial statements and related matters.
Please contact
Lauren Hamill at 303-844-1008 or Chris Edwards at 202-551-6761 with any other
questions.
Sincerely,
FirstName LastNameErik Ostrowski
Division of
Corporation Finance
Comapany NameAVROBIO, Inc.
Office of Life
Sciences
April 8, 2024 Page 5
cc: Adam Johnson
FirstName LastName