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United States securities and exchange commission logo
October 30, 2022
David Hui Shao
Chief Executive Officer
YishengBio Co., Ltd
Building No. 2, 38 Yongda Road
Daxing Biomedical Industry Park
Daxing District, Beijing, PRC
Re: YishengBio Co., Ltd
Draft Registration
Statement on Form F-4
Submitted October
3, 2022
CIK No. 0001946399
Dear David Hui Shao:
We have reviewed your draft 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 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 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 the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-4 submitted October 3, 2022
Cover Page
1. We note your disclosure
that you anticipate being a "controlled company" as defined
under the Nasdaq
corporate governance rules. Please clarify whether you intend to take
advantage of the
controlled company exemptions under the Nasdaq rules.
2. We note your disclosure
that "YS Group did not transfer any cash proceeds to any of
[y]our PRC subsidiaries
except for the cash transfers within [y]our Group in connection
with the paid-in
capital in [y]our PRC subsidiaries." Please quantify the amounts or
otherwise advise.
David Hui Shao
YishengBio Co., Ltd
October 30, 2022
Page 2
3. Please revise your cover page disclosure regarding your operations in
China and risks
related to doing business in China to make it more prominent.
Industry and Market Data, page 3
4. We note your statement that certain information contained in the
prospectus involves a
number of assumptions and limitations, and investors are cautioned not
to give undue
weight to such estimates. Please revise to remove any implication that
investors are not
entitled to rely on the disclosure in your registration statement.
Frequently Used Terms, page 4
5. You define "China" to mean the People's Republic of China, excluding
Hong Kong,
Macau, and Taiwan. Please amend to clarify that the legal and
operational risks associated
in China also apply to operations in Hong Kong and Macau.
Additionally, to the extent
you have operations in Hong Kong and Macau, or have directors and
officers located in
Hong Kong or Macau, discuss the commensurate laws and regulations in
Hong Kong
or Macau, if applicable, and any risks and consequences to the company
associated with
those laws and regulations.
Questions and Answers About the Proposals, page 9
6. We note that the Forward Purchase Investors appear to be investing
into the proposed
business combination at a discount compared to Summit public
shareholders based on
your implied price per share shown in your table on page 18 and your
disclosure
elsewhere that 375,000 Founder Shares of Summit were transferred from
the Sponsor to
the Forward Purchase Investors in connection with the Forward Purchase
Agreements.
Please add a question and answer addressing why these investors as
compared to the
Summit public shareholders are investing at a discount and address the
potential impact of
such financings on Summit public shareholders such as the immediate
dilution that
Summit public shareholders will experience from the Forward Purchase
financing or
otherwise advise. In addition, please update your disclosure on page
30 to disclose that
375,000 Founder Shares were transferred from Summit to the Forward
Purchase Investors
in connection with the Forward Purchase Agreements.
7. In this section and your risk factor section, please highlight the
material risks to
public warrant holders, including those arising from differences between
private and
public warrants. Clarify whether recent common stock trading prices
exceed the threshold
FirstName LastNameDavid Hui Shao
that would allow the company to redeem public warrants. Clearly explain
the steps, if any,
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the company Co.,
will take to Ltd all shareholders, including beneficial
owners, regarding
notify
Octoberwhen the warrants
30, 2022 Page 2 become eligible for redemption.
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Q: What shall be the relative equity stakes of Summit Shareholders, YS
Biopharma shareholders
immediately after the consummation..., page 12
8. Please disclose the sponsor and its affiliates' total potential
ownership interest in the
combined company, assuming exercise and conversion of all securities.
9. Quantify the value of warrants, based on recent trading prices, that
may be retained by
redeeming stockholders assuming maximum redemptions and identify any
material
resulting risks.
Q: What interests do Summits Directors and Officer have in the Business
Combination?, page 16
10. Please highlight the risk that the sponsor will benefit from the
completion of a business
combination and may be incentivized to complete an acquisition of a
less favorable target
company or on terms less favorable to shareholders rather than
liquidate.
Summary of the Proxy Statement/Prospectus
The Parties to the Business Combination
YS Group, page 27
11. We note your diagram illustrating the corporate structure of YS Group.
Please amend and
clarify why Yi Zhang, Hopeful World Company Limited, Apex Pride Global
Limited, and
Actors Town International Limited are enclosed together in a group
versus the other three
shareholders of YS Biopharma or otherwise advise.
12. Please provide a graphic illustration of the post-merger
organizational structure.
The Summit Board's Reasons for the Approval of the Business Combination, page
31
13. We note your statement that, "[t]he Summit Board believes that PIKA
rabies vaccine
enables YS Group to capture the future rabies vaccines market demand
in emerging
markets with its competitive advantages." Please balance your
disclosure to clarify that
the PIKA rabies vaccine is a product candidate that has not been
approved.
14. We note your disclosure that "[a]n aggregate of US$30 million of
private capital has been
committed by Forward Purchase Investors, which indicates confidence
and support for the
Business Combination from third party investors." However, we also
note that the
Forward Purchase Investors entered into the forward purchase
agreements in connection
with Summit's IPO and prior to the announcement of the Business
Combination and
received 375,000 founder shares in connection with entering into the
forward purchase
agreements. Please clarify how their prior commitments indicate
"confidence and support"
in the Business Combination with YS Biopharma or otherwise advise.
Regulatory Matters, page 41
15. You state that YS Group has obtained all material licenses, permission
or approvals for its
business operations in China. Please state affirmatively whether you
have received all
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requisite permissions and whether any permissions have been denied. In
addition, we note
your disclosure elsewhere that, "based on the advice of YS Biopharma
s PRC legal
counsel and its understanding of the current PRC laws and regulations,
that the CSRC
approval under the M&A Rules is not required in the context of the
Business
Combination." Please identify the counsel here and file its consent.
Risk Factor Summary (page 54), page 42
16. We note your disclosure on page 117 that YS Group and its independent
registered public
accounting firm identified a material weakness in its internal control
over financial
reporting as of March 31, 2022. Please update your risk factor summary
section to
disclose the material weakness.
Risks Related to Extensive Government Regulations
YS Group may be restricted from transferring its scientific data abroad and
subject to regulations
on human genetic resources., page 70
17. We note your risk factor disclosure discussing the Scientific Data
Measures and the
Regulation on the Management of Human Genetic Resources. Please
clarify your
disclosure to discuss whether you transfer scientific data outside of
China and disclose
whether or not any of your research is funded at least in part by the
Chinese
government. In addition, please explain how you determined that
permissions and
approvals were not necessary under either of these regulations. If the
company relied on
the advice of PRC counsel, please identify counsel and file the
consent of counsel as an
exhibit. If the company did not consult counsel, please explain why
and the basis for your
belief that you are not required to obtain approvals for your
operations under either of
these regulations or otherwise advise.
Risks Related to Doing Business in China
Recent regulatory development in China may exert more oversight and control
over listing and
offerings..., page 99
18. We note your disclosure regarding Cyberspace Administration of China's
("CAC") greater
oversight over data security and the risks this could have for YS
Group on a post-
combination basis. Please amend to include how CAC's oversight could
impact your
initial business combination.
Risk Factor
YS Biopharma will be an emerging growth company and may take advantage of
certain reduced
reporting requirements., page 116
19. Here you state that the extended transition period under the JOBS Act
for complying with
new or revised accounting standards is not applicable to YS Biopharma
since it reports
under International Financial Reporting Standards, or IFRS, as issued
by the International
Accounting Standards Board. However, we note that YS Biopharma reports
under
David Hui Shao
YishengBio Co., Ltd
October 30, 2022
Page 5
accounting principles generally accepted in the United States of
America as shown in the
auditor's report at F-40 and Note 3 at F-47. Please revise to be
consistent.
Timeline of the Business Combination, page 157
20. Please provide additional detail regarding the negotiations with YS
Biopharma relating to
material terms of the transaction including, but not limited to,
structure, consideration,
valuation, and proposals and counter-proposals. In your revised
disclosure, please explain
the reasons for the terms, each party's position on the issues, how
and why they evolved
over time, and how you reached agreement on the final terms.
21. We note your disclosure here that "[o]n August 2, August 4, and August
8, 2022, Cooley
and WSGR had further discussions regarding details of the deal
structure." Please expand
your disclosure to discuss what was discussed at each meeting or
otherwise advise.
Reasons for Summit Board's Approval of the Business Combination, page 160
22. We note your disclosure that, "[i]n evaluating the transaction with YS
Biopharma, the
Summit Board consulted with its legal counsel and financial,
accounting and other
advisors, as well as the YS Biopharma management." Please revise your
disclosure here to
clearly identify each party the Summit Board consulted.
Procedures, page 165
23. We note that ValueScope reviewed certain financial and product
projections prepared by
YS Biopharma s management. Please include all projections prepared
by YS Biopharma's
management and provided to ValueScope in connection with its fairness
opinion and
describe the material assumptions and limitations underlying such
projections.
Summary of Valuation Analysis and Opinion of Financial Advisor to Summit Board
Overview, page 165
24. We note that ValueScope provided a fairness opinion in connection with
the business
combination. Please update your disclosure to quantify the fees
received or to be received
by ValueScope upon completion of the business combination and any
amount that is
contingent upon completion of transaction. Also, please include a
clear description of any
additional services ValueScope or its affiliates provided in
connection with the transaction
or any services provided to the target or its affiliates, if
applicable.
25. We note that ValueScope provided a fairness opinion. Please revise to
clearly state that
the fairness opinion addresses fairness to all shareholders as a group
as opposed to only
FirstName LastNameDavid Hui Shao
those shareholders unaffiliated with the sponsor or its affiliates.
Similarly, please also
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update Co.,
your question and Ltd that discusses the fairness opinion on
the bottom of page
answer
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YS Group's Market Opportunities
Competitive landscape of China's rabies vaccine market, page 198
26. We note your disclosure of the competitive landscape of China's rabies
vaccine market for
calendar year 2021. Please update your disclosure to discuss YS
Group's market share as
of a more recent date, if possible.
YS Group's Business
Overview, page 207
27. We note you state that PIKA rabies vaccine has gone through Phase I
and Phase II clinical
studies to date. For each study, please state the country or countries
the clinical study was
conducted in and when it was completed.
Competitive Strengths
Next-generation PIKA rabies vaccine with accelerated regimen and broad
protection against
multiple virus strains..., page 208
28. We refer to your statements throughout this section where you state
that your PIKA rabies
vaccine leads to a potentially superior efficacy and solid safety
profile" and elicits a
"more robust immunogenic response. As safety and efficacy
determinations are solely
within the FDA s authority (or applicable foreign regulator) and are
continually evaluated
throughout all phases of clinical trials, please remove all such
statements. You may
present objective trial data without including conclusions relating to
efficacy. In addition,
please revise your disclosure throughout when you discuss your
"next-generation PIKA
rabies vaccine" to clarify that it is not an approved product, but a
product candidate in
development or otherwise advise.
29. You state faster seroconversion is clinically meaningful. Please
update your disclosure to
explain why faster seroconversion is meaningful and clarify how
seroconversion rates are
measured.
30. We note your disclosure that, "[a]ccording to the F&S Report, PIKA
rabies vaccine has
reported the highest seroconversion rate on day 7 among all candidates
with
published clinical data in China so far." Please remove the statement
or include balancing
disclosure that clearly states that no head-to-head trials have
compared the PIKA rabies
vaccine to other vaccine candidates studied in China and that you
cannot guarantee that
such a trial would show similar results.
31. You state that PIKA rabies vaccine will begin Phase III in Singapore
in the second half of
2022. Please clarify whether Phase III has begun or state projected
date as we are now
near the end of 2022.
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YS Group's Marketed Products and Product Candidates
Overview, page 216
32. We note that your pipeline table on page 217 summarizes the status of
your portfolio of
marketed products and product candidates. For example only, we note
that for PIKA
Recombinant COVID-19 Vaccine your upcoming milestones column
states that you
expect to enter into Phase II & III trials in UAE, Philippines, and
Pakistan in the second
half of 2022. However, your arrows appear to indicate that PIKA
Recombinant COVID-
19 Vaccine has already entered Phase II. Please revise the length of
the arrows for each
product candidate to accurately show its progression in relation to
each stage of
development or otherwise advise.
YSJA Rabies Vaccine - YS Group's marketed product
Better safety profile, page 218
33. You state that according to a head-to-head study, YSJA rabies vaccine
causes less pain
and injection site discomfort. Please revise your disclose to discuss
the material details of
the head-to-head study, including, but not limited to, a discussion of
the trial design, who
conducted the study, number of participants and other rabies vaccines
studied.
YS Group's clinical stage product candidates , page 219
34. We note you have product candidates that have completed Phase I or
Phase II of trials
where primary and secondary endpoints are referenced. Please revise
your disclosure to
provide p-values and conclusions as to statistical significance of all
primary and
secondary endpoints discussed for each of your material preclinical
trials. If no statistical
analysis was performed please state so.
Summary of preclinical and clinical studies, page 221
35. Please update your numerical list to clearly indicate which trials
have been completed and
which trials are planned.
PIKA Recombinant COVID-19 Vaccine (injectable)
Advantages, page 229
36. We note your disclosure that "[b]ased on the results of YS Group s
controlled animal
studies (not head-to-head), YS Group observed that PIKA recombinant
COVID-19
vaccine, once marketed, may have the following characteristics and
advantages over other
marketed products and late clinical stage product candidates as of the
date of this proxy
statement/prospectus." Please note that comparisons to available
products and other
product candidates are not appropriate unless you have conducted head
to head trials. In
addition, please add balancing disclosure consistent with your risk
factor disclosure on
page 64 that "[r]esults of earlier clinical trials may not be
predictive of results of later-
stage clinical trials."
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Summary of Preclinical Results
Antigen Selection, page 231
37. We note use of p-values in Figure 15. At first use, please explain how
"p-value" is used to
measure statistical significance and the relevance of statistical
significance to evidentiary
standards for drug approval.
PIKA YS-ON-001
Advantages, page 243
38. We note your disclosure here where you discuss the potential
advantages of your product
candidate, including your disclosure that "YS Group s preclinical
research has
demonstrated that PIKA YS-ON-001 outperformed many first-line
chemotherapy drugs,
targeted drugs and immunotherapy drugs" and Figure 8 appears to not
based on head-to-
head studies. In order to direct comparisons to other drugs currently
available or in
development, such comparisons must be based on head to head trials.
Please remove such
comparisons throughout your draft registration statement.
YS Group's Strategic Collaborations, page 248
39. We note your disclosure in this section that you entered into a
collaboration agreement
with CEPI and a global health agreement with Adjuvant. Please file
these agreement as an
exhibit to your registration statement or tell us why you believe you
are not required to do
so. In addition, please update your disclosure to describe the
material terms of the CEPI
agreement or otherwise advise.
Intellectual Property
Patents, page 254
40. We note your table summarizing your various patents. Please add a
column to list the type
of patent protection (i.e. composition of matter, use or process).
YS Biopharma's Management's Discussion and Analysis of Financial Condition and
Results of
Operations
Research and development expenses, page 290
41. Please revise to disclose the costs incurred on each of your key
research and development
projects. If you do not track your research and development costs by
project, please
disclose that fact and explain why you do not maintain and evaluate
research and
development costs by project.
Unaudited Pro Forma Condensed Combined Financial Information
Anticipated Accounting Treatment, page 306
42. Here you describe the business combination as being accounted for
under IFRS 2, which
is inconsistent with your disclosure on page 311 that the business
combination will be
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accounted for as a reverse recapitalization under US GAAP. Please
revise to reflect the
appropriate body of accounting. Further, based on the terms of the
transaction, YS
Biopharma appears to be both the legal and accounting acquirer. Please
advise why you
would not account the business combination as a recapitalization, or
revise accordingly.
Basis of Pro Forma Presentation
Assuming Maximum Redemption, page 307
43. Your presentation of the maximum redemption scenario assumes that 85%
of Summit
Public Shares (17 million) are redeemed for aggregate redemption
payments of $170
million. You further disclose that 85% is the Maximum Redemption
percentage permitted
while ensuring that the Available Closing Cash Amount is no less than
$30 million even if
Summit and YS Biopharma do not receive any proceeds pursuant to the
Forward Purchase
Agreements or raise any other permitted equity financings prior to the
Closing. It is
unclear to us how you determined that 85% is the Maximum Redemption
percentage
given the existence of the Forward Purchase Agreements which would
provide you with
aggregate proceeds of $30 million in a private placement to close
concurrently with the
Business Combination. As the proceeds from the private placement would
count towards
your Available Closing Cash Amount, it appears that there is a
scenario where more than
85% of Summit Public Shares could be redeemed while not impacting the
consummation
of the Business Combination. Further, your pro forma financial
statements include the
receipt of these proceeds from the private placement as reflected in
pro forma adjustment
(F). Please revise your maximum redemption scenario accordingly or
explain to us how
your current presentation is consistent with the terms of the Business
Combination
agreement and your assumption within the pro formas that private
placement pursuant to
the Forward Purchase Agreements will occur.
Note 3 Adjustments to Unaudited Pro Forma Condensed Combined Financial
Information
Adjustment (G) to Unaudited Pro Forma Condensed Combined Balance Sheet, page
313
44. Here you state that pro forma adjustment (G) represents 750,000
redeemable warrants
pursuant to the Forward Purchase Agreements, and that in connection
with the issuance of
the Forward Purchase Securities, the combined Company recorded
additional warrant
liabilities of $1,065,000. However, the amount reflected in adjustment
(G) is $8,625,000
which appears to represent the cash proceeds that would be received
upon exercise of
these warrants (based on $11.50 exercise price). Please address the
following:
Explain to us why it is appropriate to reflect the exercise of
the warrants to be issued
under the Forward Purchase Agreements in your pro forma financial
statements given
that the exercise is not within the control of the company.
Explain how your current pro forma presentation is consistent
given that you present
a warrant liability but also reflect the proceeds to be received
upon exercise of such
warrants. It would appear that upon exercise of the warrants, the
warrant liability
would be reclassified to equity.
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Clarify whether the exercise of these warrants has been
included in your redemption
scenarios presented elsewhere, as well as in your pro forma EPS
calculation on page
313.
Explain your accounting basis for classifying these warrants as
a liability. Please
quote the accounting literature you relied upon in your response.
Note 4. Net Loss per Share, page 314
45. Please remove the notes (1)(2)(3) related to the historical and pro
forma book value
since you do not present them here. Please also expand note (7) to
present the quantitative
balances for the equity items excluded from your pro forma net loss
per share presentation
and consider providing a sensitivity analyses for their impact if
helpful to investors.
Finally, we note that the pro forma balances for loss per share and
weighted average
number of ordinary shares outstanding presented at the bottom of page
310 are different
from the corresponding balances included in this note. Please revise
for consistency.
YishengBio Co., Ltd. Financial Statements
Note 3. Summary of Significant Accounting Policies
Revenue from Contracts with Customers, page F-53
46. Please revise your revenue recognition policy to specifically define
when the customer
obtains control over a product or service when you recognize the
revenue at a point in
time. In that regard, we noted you disclosed at page 289 that "revenue
is generally
recognized when YS Group provides rabies vaccine products to customers
at a point in
time when the products have been accepted by customers which is
generally when YS
Group satisfies the associated performance obligation." In addition,
please also tell us, and
revise if necessary, whether your revenue contracts with customers
involve variable
considerations, such as discounts and rebates. Lastly, explain to us
whether the service
providers as disclosed under Note 11 for guarantee deposits are
considered customers
under ASC 606, and if so, please revise your revenue recognition
policy to provide
additional disclosures under those arrangements, including
disaggregated amounts
recognized under those service provider contracts, vs. the sales to
the county level CDCs.
Note 4. Accounts Receivable, Net, page F-59
47. Considering the significant amount of the accounts receivable at
period end comparing to
your reported revenues, please provide us an analysis of your
allowance for credit losses
on your accounts receivable, including an aging of your outstanding
receivable balances.
Please also confirm whether your accounts receivable at March 31, 2022
are all related to
sales since October 2020 when you resumed sales of YSJA rabies
vaccines.
Note 9. Bank Loans and Other Borrowings, page F-62
48. Please revise to expand your disclosures for the facility agreement
with R-Bridge
Healthcare Fund, LP. to include all key terms and your future
obligations. In that regard,
David Hui Shao
YishengBio Co., Ltd
October 30, 2022
Page 11
we note you disclosed it as a royalty-based long-term debt arrangement
on page 65. Please
also revise your principal payment schedule to present the actual date
and amount
for better illustration.
Note 13. Convertible Redeemable Preferred Shares, page F-64
49. Please explain to us, and revise if necessary, how you have arrived at
the 17% annual
compound interest for Series A in their redemption value calculation
as disclosed on page
F-67. Please also revise to disclose the liquidation preference for
your convertible
redeemable preferred shares as required under ASC 505-10-50-4, if
different from their
currently reported value as of March 31, 2022.
Exhibits
50. Please file a copy of the $40 million royalty-based 4.5-year long debt
transaction with R-
Bridge Investment Holdings PTE as an exhibit to your registration
statement or tell us
why you believe you are not required to do so. Refer to Item
601(b)(10) of Regulation S-
K. In addition, please expand your disclosure to describe all material
terms of the
agreement including the royalty term and quantification of the royalty
rate, or a range no
greater than 10 percentage points per tier.
General
51. We note you have various graphics throughout YS Biopharma's Business
section that
contain text that is illegible. Please revise applicable figures
accordingly to ensure the text
is legible.
52. With a view toward disclosure, please tell us whether your sponsor is,
is controlled by, has
any members who are, or has substantial ties with, a non-U.S. person.
Please also tell us
whether anyone or any entity associated with or otherwise involved in
the transaction, is,
is controlled by, or has substantial ties with a non-U.S. person. If so,
please revise your
filing to include risk factor disclosure that addresses how this fact
could impact your
ability to complete your initial business combination. For instance,
discuss the risk to
investors that you may not be able to complete an initial business
combination with a
target company should the transaction be subject to review by a U.S.
government entity,
such as the Committee on Foreign Investment in the United States
(CFIUS), or ultimately
prohibited. Further, disclose that the time necessary for government
review of the
transaction or a decision to prohibit the transaction could prevent you
from completing an
initial business combination and require you to liquidate. Disclose the
consequences of
FirstName LastNameDavid Hui Shao
liquidation to investors, such as the losses of the investment
opportunity in a target
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company, Co., Ltd in the combined company, and the
warrants, which
any price appreciation
Octoberwould expire
30, 2022 worthless.
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53. It appears that Summit Healthcare Acquisition Corp.'s amended and
restated
memorandum and articles of association waived the corporate
opportunities doctrine. In
an appropriate place in your filing, please address this potential
conflict of interest and
whether it impacted your search for an acquisition target.
54. Please revise any statements concluding your product candidates are
safe or effective to
instead refer to objective trial results. For example only, we note
disclosure on page 59
where you state that your PIKA rabies vaccine features an "accelerated
regimen and
superior efficacy and solid safety profile," on page 161 where you
state that "YS
Biopharma has a robust portfolio of innovative product candidates,
with better safety and
efficacy potential to address the unmet needs in preventing and/or
treating infectious
diseases and cancer," and on page 229 where you state "PIKA
recombinant COVID-19
vaccine exhibits promising treatment benefit." Please remove these
statements, and any
similar statements throughout your draft registration statement, as
conclusions of safety
and efficacy are within the sole authority of the FDA and comparable
foreign regulators.
55. We note the disclosure on page 39 that the Sponsor, YS Biopharma,
and/or Summit s or
YS Biopharma s directors, officers, or respective affiliates may
purchase Summit Public
Shares to reduce the redemption rates and increase the likelihood of
the completion of the
combination. Please provide your analysis on how such purchases comply
with Rule 14e-
5.
56. We note your disclosure that the merger will qualify as a
reorganization within the
meaning of Section 368(a) of the Code. Please file a tax opinion as an
exhibit to your
registration statement. Please also revise your disclosure on page 325
to reflect that the tax
consequences discussed represent the opinion of counsel. Refer to Item
601(b)(8) of
Regulation S-K. For guidance, please refer to Staff Legal Bulletin No.
19.
You may contact Li Xiao at 202-551-4391 or Angela Connell at
202-551-3426 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Doris Stacey Gama at 202-551-3188 or Jason Drory at 202-551-8342 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Life
Sciences
cc: Dan Ouyang, Esq.