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United States securities and exchange commission logo
June 17, 2021
Shane Schaffer
Chief Executive Officer
Cingulate Inc.
1901 W. 47th Place
Kansas City, KS 66205
Re: Cingulate Inc.
Draft Registration
Statement on Form S-1
Submitted May 24,
2021
CIK No. 0001862150
Dear Mr. Schaffer:
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 S-1
Cover Page
1. To facilitate an
understanding of the transaction, please prominently identify the
reorganization and
related agreements as an Up-C transaction. This should also be
stated elsewhere in the
prospectus where the transactions are discussed. In addition,
please expand your
disclosure to explain the material ways in which the structure benefits
the company and other
related parties. Conflicts of interest related to such benefits should
be discussed in the
Summary and Risk Factors section.
Shane Schaffer
FirstName LastNameShane Schaffer
Cingulate Inc.
Comapany
June NameCingulate Inc.
17, 2021
June 17,
Page 2 2021 Page 2
FirstName LastName
Basis of Presentation, page ii
2. The pro forma condensed consolidated financial data you refer to
appears to relate to the
presentation of capitalization and dilution sections of this
submission. Please provide a
pro forma condensed balance sheet and pro forma condensed statements
of comprehensive
income for the latest annual and interim periods presented to
illustrate how the
organizational transactions described on page 69 will impact the
historical financial
statements. As a smaller reporting company, you may refer to Article
11 of Regulation S-
X for guidance.
Prospectus Summary
Overview, page 1
3. Please balance your Summary disclosure by discussing the competitive
landscape
applicable to your product candidates and the uncertainty surrounding
the performance of
your product candidates in clinical trials, given the stage of
development of each.
4. Please make the following revisions, both in the Summary Overview and
throughout the
prospectus where similar statements or claims are made:
Remove statements that your October 2020 Phase 1/2 trial of
CTx-1301 in ADHD
patients established "safety" of CTx-1301, as safety and efficacy
determinations are
the exclusive purview of the the FDA or other regulators;
Remove statements that CTx-1301 is a "late-stage asset," as this
implies that the
product is farther into the development process than it really is;
Remove statements that you plan to initiate Phase 3 trials for
CTx-1302 in 2022, as
this statement presumes that your Phase 1/2a trials will be
successful;
Remove statement that you plan to submit new drug applications for
CTx-1301 and
CTx-1302 in the first half of 2023 and in 2024, respectively, as
this statement
presumes that your Phase 3 trials will be successful.
Please ensure that similar statements on page 94 are also revised or
removed.
Our Clinical Development Pipeline , page 2
5. Please make the following revisions to your pipeline table on pages 2
and 95:
Provide two separate columns for Phases 1 and 2;
For CTx-1302, only provide the anticipated milestone for the next
trial (e.g., a phase
1/2 trial) rather than listing all future phases;
Provide a footnote to explain the use of the trademarks "Mastery"
and "Accomplish"
in the Anticipated Milestones column;
Remove the shaded orange arrows so the only progress arrows
included accurately
depict the progression of development achieved for each product
candidate to date.
The table should be a reflection of the narrative disclosure in
the prospectus and
should not be used to prematurely project successful completion of
the stages
required prior to commercialization.
Combine the "PTR Platform Proof of Concept" column and the
"Formulation
Shane Schaffer
FirstName LastNameShane Schaffer
Cingulate Inc.
Comapany
June NameCingulate Inc.
17, 2021
June 17,
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FirstName LastName
Development" columns, as both relate to pre-clinical development.
Additional
columns should not be added to the pipeline table to create the
impression of further
progress. Note that we will not object to pre-clinical stage
columns labeled as
"discovery" and/or "IND-enabling."
Our Proprietary Precision Timed Release Drug Delivery Platform Technology, page
3
6. We note your disclosure here and throughout the filing that you
believe your timed release
drug delivery platform technology will "lower abuse potential" because
it will "eliminate[]
the need for a second stimulate dose." This statement appears to be
incomplete, as
you state on page two that "CTx-1301 and CTx-1302 product candidates
both contain 3
doses of active pharmaceutical ingredient combined into one small
tablet." Please ensure
that any statements concerning "lower abuse potential" are properly
balanced with
disclosure that that one dose of CTx-1301 or CTx-1302 is the
equivalent of three doses of
other Schedule II stimulants.
Our Strategy, page 4
7. We note your disclosure that you intend to "[r]apidly advance through
clinical trials and
eventually obtain regulatory approval for CTx-2103 for the treatment
of anxiety." Please
revise this disclosure to remove any implication that you will be
successful in
commercializing your product candidates in an accelerated manner, as
such statements are
speculative and outside of the company's control given the extensive
regulatory process
and approvals required. Ensure that similar language throughout the
prospectus is also
removed.
Our Organizational Structure, page 7
8. Please disclose in this summary section that CTx's shares of Class B
common stock will
allow it to exercise voting power over Cingulate Inc. at a level that
is greater than its
overall equity ownership of your business. We note disclosure to this
effect on page 72.
9. Please enlarge the post-reorganization charts to ensure the font is
legible and include
estimated ownership percentages for each branch as you have done in
the pre-
reorganization chart on page 71.
Risk Factors
We are a development stage biopharmaceutical company with a limited operating
history., page
14
10. Your disclosure that you are a "development stage" company contradicts
your disclosure
on page 1 that you are a clinical stage company. Please revise.
Shane Schaffer
FirstName LastNameShane Schaffer
Cingulate Inc.
Comapany
June NameCingulate Inc.
17, 2021
June 17,
Page 4 2021 Page 4
FirstName LastName
Risks Related to Development, Clinical Testing, Manufacturing and Regulatory
Approval, page
18
11. Please provide expanded risk factor disclosure concerning the clinical
trial risks associated
with pediatric trials. We note that two of the three segments for
which CTx-1301 and
CTx-1302 are being developed are for children (ages 6 -12) and
adolescents (ages 13-17).
We rely and expect to continue to rely completely on third parties to formulate
and manufacture
our preclinical, clinical trial..., page 37
12. Your disclosure that you "have no experience in drug formulation or
manufacturing"
appears to contradict your disclosure on page 4 that your "founders
and management team
have many years of experience in the biopharmaceutical space" and
possess "substantial
experience and expertise across the spectrum of drug development and
commercialization
of pharmaceutical products[.]" This disclosure also appears to
contradict your disclosures
on page 96 that you want to "[c]apitalize on our existing cGMP
Manufacturing Expertise"
and that you "have developed a proprietary, reliable, high output,
specialized
manufacturing equipment train with the potential for real-time testing
and release." Please
advise and revise.
Industry And Other Data , page 67
13. Your statement that investors are cautioned not to give undue weight
to the market and
industry data used in the prospectus may imply an inappropriate
disclaimer of
responsibility with respect to the third party information. Please
either delete these
statements or specifically state that you are liable for such
information.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources, page 90
14. Please revise your liquidity disclosures to address the Tax Receivable
Agreement,
disclosing your estimates of annual payments and how you intend to
fund the required
payments under the agreement. In this regard, we note your statements
that you expect the
future payments under the agreement may be substantial. This
information should also be
disclosed in the Summary and in the Risk Factors.
Business
Our Strategy , page 96
15. Please remove the statement that you "plan to initiate pivotal Phase 3
clinical trials in all
patient segments for CTx-1302 in late 2022 with results expected in
early 2024. Assuming
we receive positive clinical results from our Phase 1/2
bioavailability study, our pivotal
Phase 3 trials and additional planned supplementary trials, we plan to
submit an NDA for
CTx-1302 in the second half of 2024 under the Section 505(b)(2)
pathway." Given that
you will not initiate a Phase1/2 bioavailability study in ADHD
patients until 2022, these
Shane Schaffer
FirstName LastNameShane Schaffer
Cingulate Inc.
Comapany
June NameCingulate Inc.
17, 2021
June 17,
Page 5 2021 Page 5
FirstName LastName
statements are premature and speculative. Additionally, remove the
statement that your
manufacturing "process has been designed and proven with CTx-1301," as
efficacy
determinations are the exclusive purview of the FDA or other
regulators.
Cingulate's Product Candidates versus Major ADHD Competitors (>75% of the ADHD
Market),
page 100
16. Please remove the chart entitled "Cingulate's Product Candidates
versus Major ADHD
Competitors (>75% of the ADHD Market)" from the prospectus. It is
inappropriate to
provide projected approval dates for the company's product candidates,
as these
determinations are solely within the purview of the FDA and out of the
company's control.
In addition, because the company has not conducted head to head
studies with the
competing products listed, nor has either candidate completed clinical
trials, it is
inappropriate to present the information as if they have been directly
compared and
studied.
Our CTx-1301 Clinical Development Program, page 104
17. You note that the proposed clinical program for CTx-1301 consists of
three Phase 1
clinical pharmacology studies, but you only report the findings from
one Phase 1/2
Bioavailability Trial. Please provide more information about all of
these trials including
their underlying protocols and results. We also note that you disclose
on page one
that CTx-1301 is being developed for three main patient segments
(children ages 6 -12,
adolescents ages 13-17, and adults ages 18+), but that this section
does not provide any
additional information about the trial results for each of these
segments. Please revise or
explain.
18. We note the following statement on page 104: "There were no unexpected
adverse events,
serious adverse events, deaths, or other safety signals." The
statement as drafted may be
construed to mean that SAEs or deaths occurred as a result of the
Phase 1/2 study, but
were expected. Please revise to clarify and provide detail regarding
any material events.
Figure 3: Comparative Bioavailability Study of CTx-1301 versus Focalin XR in
individual Adult
ADHD subjects under Fasted Conditions. . ., page 107
19. The font in this figure is too small to be legible. Please enlarge.
Additionally, please
revise this chart to better clarify whether each of your individual
conclusions in these four
charts (e.g. "eliminate booster dose" or "stop crash & rebound")
applies to both the low
and high dose trials or only to a specific trial. As written, it
appears that only the lower
dose trial concluded that it could "eliminate booster dose" and only
the high dose trial
concluded that it could "stop crash & rebound."
Our CTx-1302 Clinical Development Program, page 109
20. We note your statements on page 107 and 109 that you "plan to initiate
Phase 1, 2 and 3
Shane Schaffer
FirstName LastNameShane Schaffer
Cingulate Inc.
Comapany
June NameCingulate Inc.
17, 2021
June 17,
Page 6 2021 Page 6
FirstName LastName
trials in 2022 and to file an NDA in 2024" and "plan to initiate Phase
3 trials in the fourth
quarter of 2021 and to file an NDA in the first half of 2023". In
addition, you
reference your correspondence with the FDA and state that you believe
that the proposed
clinical programs and trials "will fulfill the clinical developmental
program requirements
thus allowing us to seek approval for the treatment of ADHD in
patients 6 years and
older." Please revise these statements, as they are speculative and
premature.
Our Planned Phase 3 ACCOMPLISH Trials, page 110
21. Please clarify that you will only undertake these Phase 3 trials for
CTx-1302 should the
data from the Phase 1 and Phase 2 trials support continued Phase 3
testing.
Intellectual Property, page 112
22. Please revise your intellectual property disclosure to clearly
describe on an individual or
patent family basis the type of patent protection granted for each
technology, the
expiration of each patent held, and the jurisdiction of each patent.
In this regard, it may be
useful to provide this disclosure in tabular form to support the
narrative already included.
Patent and Know-How License Agreement with BDD Pharma Limited, page 132
23. Please revise your disclosure concerning the BDD license agreement to
disclose the
expected expiry of the last-to-expire patent licensed under the
agreements or the expected
last-to-expire payment obligations.
Executive Compensation
Summary Compensation Table, page 139
24. We note the introduction to the Summary Compensation Table states that
the table
provides compensation information for the fiscal years ended December
31, 2020 and
2019. However, the table only includes information for 2020. Please
revise to include
2019 or explain why such information has been omitted.
Certain Relationships and Related Party Transactions, page 148
25. We note your use of the defined term "Redeemed Members" in this
section and
throughout the filing, and your statement on page 6 that the Redeemed
Members are
"certain of [the company's] historical members". Please revise, where
appropriate, to
identify the members by name. In addition, we note your discussion of
a $500,000
promissory note issued to a "Member of the Company". Please identify
the member by
name. See Item 404(a)(1) of Regulation S-K. Finally, please provide
your analysis as to
why the related party notes have not been filed as exhibits to the
registration statement.
Notes to Consolidated Financial Statements
Note 8 - Profits Interest Plan, page F-16
26. You state on page 87 that a future event, such as a public offering,
would create a
Shane Schaffer
Cingulate Inc.
June 17, 2021
Page 7
modification of the PIUs issued under the Cingulate Therapeutics LLC
Equity Incentive
Plan. Please tell us:
what modifications the Plan would call for, including any
requirement to convert the
PIUs into options to purchase shares of Class A common stock, and
what terms, if any, are required for a public offering in order to
require modification
of the PIUs.
Exhibits
27. Please file a tax opinion as an exhibit to the filing or provide us with
your analysis as to
why the tax consequences of the Up-C reorganization transactions are not
material to an
investor, and therefore no tax opinion is required to be filed. Refer to
Item 601(b)(8) of
Regulation S-K and Section III.A.2 of Staff Legal Bulletin 19.
General
28. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
You may contact Gary Newberry at 202-551-3761 or Daniel Gordon at
202-551-3486 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Dillon Hagius at 202-551-7967 or Laura Crotty at 202-551-7614 with any
other
questions.
Sincerely,
FirstName LastNameShane Schaffer
Division of
Corporation Finance
Comapany NameCingulate Inc.
Office of Life
Sciences
June 17, 2021 Page 7
cc: Steven Skolnick
FirstName LastName