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United States securities and exchange commission logo
July 13, 2021
Chris Ehrlich
Chief Executive Officer
Locust Walk Acquisition Corp.
200 Clarendon Street, 51st Floor
Boston, MA 02116
Re: Locust Walk
Acquisition Corp.
Registration
Statement on Form S-4
Filed June 14, 2021
File No. 333-257091
Dear Mr. Ehrlich:
We have reviewed your 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.
Registration Statement on Form S-4
Cover Page
1. Please revise the
prospectus cover page to disclose the expected ownership percentages in
the combined company of
LWAC s public stockholders, the Sponsor and eFFECTOR s
stockholders.
Questions and Answers about the Proposals, page 5
2. We note your disclosure
on page 37 that the combined company intends to apply to list its
shares on the Nasdaq
Capital Market. Please disclose in this section, where appropriate,
and on the cover page
when you will file the initial listing application for the combined
company and whether
Nasdaq s determination will be known at the time that stockholders
are asked to vote on
the merger agreement.
Chris Ehrlich
Locust Walk Acquisition Corp.
July 13, 2021
Page 2
3. Please revise your disclosure, where applicable, to show the potential
impact of
redemptions on the per share value of the shares owned by
non-redeeming shareholders by
including a sensitivity analysis showing a range of redemption
scenarios, including
minimum, maximum and interim redemption levels.
Q: Are any of the proposals conditioned on one another?, page 6
4. Please revise, where appropriate (including here and on page 18), to
identify which
conditions to the completion of the merger may be waived. We refer to
your disclosure on
pages 99 and 100.
Q: Am I required to vote against the Transaction..., page 9
5. Please revise to clarify, if true, that shareholders have redemption
rights regardless of
whether they abstain or do not vote on the business combination.
Risks Related to eFFECTOR's Business, page 23
6. We refer to your disclosure on page 48 relating to the FDA s partial
clinical hold on your
Phase 2b KICKSTART clinical trial of your lead product candidate,
tomivosertib. Please
include disclosure of this partial clinical hold here and in your risk
factor disclosure on
pages 49 and 50 and discuss the impact this partial clinical hold may
have on the
enrollment of patients in your clinical trials. Please also add
related disclosure and
explain the underlying reasons for the partial clinical hold where you
discuss the Phase 2b
KICKSTART trial under the heading "Business of eFFECTOR."
Risks Related to LWAC's Business and Business Combination
If LWAC's due diligence investigation of eFFECTOR was inadequate..., page 35
7. Please disclose the material risks, where appropriate, to unaffiliated
investors presented by
taking the company public through a merger rather than an underwritten
offering. These
risks could include the absence of due diligence conducted by an
underwriter that would
be subject to liability for any material misstatements or omissions in
a registration
statement.
LWAC's directors and officers may have certain conflicts in determining to
recommend the
acquisition..., page 36
8. Please revise to 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.
FirstName LastNameChris Ehrlich
Please also clarify if the sponsor and its affiliates can earn a
positive rate of return on their
Comapany NameLocust
investment, Walk
even if otherAcquisition Corp.
SPAC shareholders experience a negative
rate of return in the
post-business
July 13, 2021 Page 2 combination company.
FirstName LastName
Chris Ehrlich
FirstName LastNameChris Ehrlich
Locust Walk Acquisition Corp.
Comapany
July NameLocust Walk Acquisition Corp.
13, 2021
July 13,
Page 3 2021 Page 3
FirstName LastName
Our Proposed Charter will provide that the Court of Chancery of the State of
Delaware..., page
40
9. Please revise your disclosure here and on page 289 to clarify whether
the exclusive forum
provision will apply to actions arising under the Exchange Act. In
that regard, we note
that Section 27 of the Exchange Act creates exclusive federal
jurisdiction over all suits
brought to enforce any duty or liability created by the Exchange Act
or the rules and
regulations thereunder. To the extent that your exclusive forum
provision will not apply to
actions arising under the Exchange Act, please revise your proposed
charter to make this
clear.
Risks Related to eFFECTOR
We are dependent on the Pfizer Agreement for the discovery..., page 60
10. We refer to your disclosure on page 60 that Pfizer may unilaterally
terminate the
agreement for convenience under certain circumstances," which you
disclose could
materially and adversely affect your business. Please expand your
disclosure of the
termination provision and the specific circumstances under which
Pfizer may unilaterally
terminate the agreement.
If we fail to maintain proper and effective internal control..., page 88
11. You disclose on page 89 that you had identified a material weakness in
internal control
over financial reporting. Please revise your disclosure in this risk
factor to specifically
identify any material weaknesses identified and whether they have been
remediated, if
applicable.
Background of the Business Combination, page 106
12. Please identify the individuals and/or parties who participated in the
meetings and
discussion described throughout this section. By way of example only,
please identify the
representatives of the LWAC Board, its scientific advisory board, and
Locust Walk
Partners who met in March 2021.
Chris Ehrlich
FirstName LastNameChris Ehrlich
Locust Walk Acquisition Corp.
Comapany
July NameLocust Walk Acquisition Corp.
13, 2021
July 13,
Page 4 2021 Page 4
FirstName LastName
13. Please revise your disclosure in this section to describe how the LWAC
Board arrived at a
valuation of $425 million for eFFECTOR. Address in your revisions the
methodology
employed in reaching the valuation. We note your disclosure that
Locust Walk Partners
presented an analysis of the valuation of eFFECTOR based on comparable
public
companies. Please revise to explain the extent to which the LWAC Board
considered such
analysis in reaching the valuation and if material, discuss the
analysis, its conclusions and
underlying assumptions. Additionally, we note your disclosure that
LWAC sent an initial
draft letter of intent to eFFECTOR in which it proposed the terms of a
business
combination. Please revise to clarify how the transaction structure
and consideration
evolved during the negotiations, including the proposals and
counter-proposals made
during the course of the negotiations, with respect to the material
terms of the merger,
including the exchange ratio and earn-out consideration.
Business of eFFECTOR, page 152
14. Please clarify the meaning of scientific or technical terms the first
time they are used in
order to ensure that lay readers will understand the disclosure. For
example, please briefly
explain what you mean by terms such as aspartate aminotransferase and
alanine
aminotransferase, oncoproteins, phosphorylate, nanomolar, stable
disease and mPFS.
15. We refer to your disclosure that your lead product candidate,
tomivosertib, is currently
being evaluated in combination with an FDA-approved inhibitor called
KEYTRUDA
(also known as pembrolizumab). Please revise to clarify that KEYTRUDA
is a frontline
therapy that is owned and developed by a third party.
Tomivosertib Mechanism of Action..., page 161
16. You disclose on page 162 that tomivosertib has been shown to
downregulate several
immunosuppressive proteins as shown in Figures 5 and 6. Please expand
your disclosure
to address related statistical significance and/or p-values.
Phase 1 Dose Escalation Trial in Cancer Patients..., page 165
17. The graphic identified as Figure 10 on page 166 contains text that is
illegible. Please
revise accordingly.
Phase 2a Trial of Tomivosertib..., page 167
18. We note your disclosure on page 167 stating that adverse events
observed with
tomivosertib in your Phase 2a trial were generally grade 1 or 2 in
severity. Please disclose
the number of patients that experienced adverse events and whether any
adverse events of
greater severity than grade 1 or 2 were observed. Please also include
disclosure in your
risk factor disclosure on page 51.
Chris Ehrlich
FirstName LastNameChris Ehrlich
Locust Walk Acquisition Corp.
Comapany
July NameLocust Walk Acquisition Corp.
13, 2021
July 13,
Page 5 2021 Page 5
FirstName LastName
Manufacturing, page 181
19. We note your risk factor disclosure that you currently rely on single
manufacturers for
different aspects of your two product candidates. Please expand your
disclosure here to
discuss your sources, including the names of any principal suppliers
or manufacturers.
See Item 101(h)(4)(v) of Regulation S-K.
Exclusive License Agreement with the Regents of the University of California
("UCSF"), page
182
20. Please revise your disclosure to clarify whether any milestones have
been met under the
UCSF License Agreement and state the aggregate amount paid to date.
Please also
disclose when the last-to-expire patent right is scheduled to expire
under the UCSF
Translational Profiling Patent Rights referenced in the third
paragraph on page 183.
21. We refer to your disclosure on page 183 relating to certain minimum
annual royalty
payments to be made to UCSF in certain circumstances. Please revise to
disclose the
minimum annual payments.
22. We note your disclosure on page 183 regarding your election to
terminate your obligations
to pay the patent prosecution costs with respect to certain products
identified as PRPS-2
Products in the UCSF license agreement and thus relinquish your rights
in such products.
Please expand your disclosure of the specific products and the
materiality of such products
to your patent portfolio and business.
Intellectual Property, page 183
23. Please revise to disclose the applicable jurisdictions of eFFECTOR s
foreign patents and
pending foreign patent applications with respect to each patent
portfolio family disclosed
on pages 183 and 184. We also note your disclosure of the expected
expiration dates for
the patents that are issued from the various pending patent
applications under each patent
portfolio family. Please revise to disclose when the existing issued
US and foreign patents
will expire under each patent family referenced.
Competition, page 185
24. We refer to your disclosure on page 153 that the market value for
anti-PD-(L)1 therapies
for the treatment of patients with metastatic NSCLC is approximately
$12 billion. You
also disclose on page 185 that certain of your competitors are focused
on therapies
targeting similar target indications, such as NSCLC or breast cancer,
while other
competitors have FDA-approved PD-1 or PD-L1 inhibitors and are
actively testing
checkpoint inhibitors. Please disclose whether any of the identified
competitors are
utilizing checkpoint inhibitors specifically for the treatment of
NSCLC or breast cancer.
Chris Ehrlich
FirstName LastNameChris Ehrlich
Locust Walk Acquisition Corp.
Comapany
July NameLocust Walk Acquisition Corp.
13, 2021
July 13,
Page 6 2021 Page 6
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operation of
eFFECTOR
Liquidity and Capital Resources, page 203
25. Please revise this section, where appropriate, to discuss the material
terms of
eFFECTOR s federal DARPA grant agreement.
Unaudited Pro Forma Condensed Combined Financial Statements
Note 1 - Description of the Business Combination , page 219
26. We note the table of the pro forma shares assuming no redemption.
Please provide a
similar table of the pro forma shares assuming maximum redemption.
Security Ownership of Certain Beneficial Owners and Management, page 249
27. Please revise to identify the natural persons with voting and/or
dispositive control of the
shares held by SR One Capital Fund I Aggregator, L.P.
Exhibits
28. We note you have indicated in the Exhibit index that certain of the
exhibits and schedules
to Exhibits 10.13 and 10.14 have been omitted pursuant to Item 601 of
Regulation S-K.
Your header to Exhibit 10.13 also states that you have made a request
for confidential
treatment. However, it appears that you have omitted information from
these exhibits in
reliance upon Item 601(b)(10)(iv) of Regulation S-K. If true, please
revise your disclosure
accordingly.
Chris Ehrlich
FirstName LastNameChris Ehrlich
Locust Walk Acquisition Corp.
Comapany
July NameLocust Walk Acquisition Corp.
13, 2021
July 13,
Page 7 2021 Page 7
FirstName LastName
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.
You may contact Michael Fay at 202-551-3812 or Angela Connell at
202-551-3426 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Jane Park at 202-551-7439 or Christine Westbrook at 202-551-5019 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Life
Sciences
cc: Cheston J. Larson, Esq.