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United States securities and exchange commission logo
January 18, 2023
Vicky Zhang
Chief Financial Officer
Adlai Nortye Ltd.
c/o PO Box 309, Ugland House
Grand Cayman, KY1-1104
Cayman Islands
Re: Adlai Nortye Ltd.
Draft Registration
Statement on Form F-1
Submitted December
21, 2022
CIK No. 0001944552
Dear Vicky Zhang:
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-1
Cover Page
1. Please disclose whether
your offering is contingent on final approval of your NASDAQ
listing on your cover
page. Ensure the disclosure is consistent with your underwriting
agreement.
2. We note your statement
on the cover page that Adlai Nortye Ltd. is "not an operating
company but [y]our
Cayman Islands holding company." Please revise this statement to
specifically state that
Adlai Nortye is not a Chinese operating company, but is a Cayman
Islands holding
company.
Vicky Zhang
FirstName LastNameVicky Zhang
Adlai Nortye Ltd.
Comapany
January 18,NameAdlai
2023 Nortye Ltd.
January
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3. We note your disclosure on the cover page about the legal and
operational risks associated
with being based in or having the majority of the company s
operations in China. Please
revise this disclosure to make clear whether these risks could result
in a material change in
your operations and/or the value of your securities or could
significantly limit or
completely hinder your ability to offer securities to investors and
cause the value of your
securities to significantly decline or be worthless.
4. Please prominently disclose whether your auditor is subject to the
determinations
announced by the PCAOB on December 16, 2021 and whether and how the
Holding
Foreign Companies Accountable Act and related regulations will affect
your company.
5. Clearly disclose how you will refer to the holding company and
subsidiaries when
providing the disclosure throughout the document so that it is clear
to investors which
entity the disclosure is referencing and which subsidiaries or
entities are conducting the
business operations. For example, disclose, if true, that your
subsidiaries conduct
operations in China. Disclose clearly the entity (including the
domicile) in which
investors are purchasing an interest.
6. We note your discussion of how cash is transferred through your
organization on the
cover page. Please further revise this disclosure to disclose your
intentions to distribute
earnings. State whether any transfers, dividends, or distributions
have been made to date
between the holding company, its subsidiaries, or to investors, and
quantify the amounts
where applicable. Please also address restrictions on your PRC
subsidiary's ability to
transfer funds, as disclosed elsewhere in the filing, and provide a
cross-reference to the
consolidated financial statements.
Prospectus Summary
Overview, page 1
7. Please revise your disclosure regarding your ongoing clinical trials
for AN0025 and
AN4005 to state the jurisdictions where such trials are taking place.
8. We note your statement used throughout the prospectus that you are
actively
advancing four in-house preclinical programs "considered to have high
global commercial
viability". Please provide support for this statement or revise to
frame the statement as
a belief or opinion.
9. Revise the summary to provide a clear description of how cash is
transferred through your
organization. Disclose your intentions to distribute earnings.
Quantify any cash flows
and transfers of other assets by type that have occurred between the
holding company and
its subsidiaries, and direction of transfer. Quantify any dividends or
distributions that a
subsidiary have made to the holding company and which entity made such
transfer, and
their tax consequences. Similarly quantify dividends or distributions
made to U.S.
investors, the source, and their tax consequences. Your disclosure
should make clear if no
transfers, dividends, or distributions have been made to date.
Describe any restrictions on
foreign exchange and your ability to transfer cash between entities,
across borders, and to
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FirstName LastNameVicky Zhang
Adlai Nortye Ltd.
Comapany
January 18,NameAdlai
2023 Nortye Ltd.
January
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U.S. investors. Describe any restrictions and limitations on your
ability to distribute
earnings from the company, including your subsidiaries, to the parent
company and U.S.
investors.
AN2025: the vanguard for recurrent or metastatic HNSCC after anti-PD-1/PD-L1
therapy, page
2
10. On page 2, you refer to AN2025 as the vanguard for recurrent or
metastatic HNSCC
after anti-PD-1/PD-L1 therapy. Please revise your use of the term in
all places in which
it appears to be expressed as a goal, belief or opinion. For instance,
you may state, if
accurate, that the Company aims to be the vanguard for recurrent or
metastatic HNSCC
after anti-PD-1/PD-L1 therapy.
11. On page 2, you reference studies demonstrating safety and efficacy.
Similarly, on page 4,
you reference that AN2025 demonstrated promising efficacy and safety
data. Please
revise these and similar statements throughout your prospectus to
eliminate conclusions or
predictions that the candidates are safe and effective, as
determinations of safety and
efficacy are solely within the authority of the FDA. You may provide
an objective
summary of the data that you used to draw such conclusions.
12. On page 3, we note your statement that you received Fast Track
designation from the
FDA for AN2025. Please balance this statement with the disclosure on
page 43 that a Fast
Track designation by the FDA may not lead to a faster development or
regulatory review
or approval process, and does not increase the likelihood that your
drug candidates will
receive marketing approval.
13. We note your references to the NMPA and the PMDA both here and
throughout the
document. Please revise your disclosure on page 3 where the terms are
first used to
indicate the jurisdiction of each authority.
Our company history and team, page 4
14. We note the last paragraph of the above referenced section on page 4.
Please limit the
disclosure of specific investors to those identified in the Principal
Shareholder table on
page 161. Additionally, indicate that prospective investors should not
rely on the named
investors investment decision, that these investors may have
different risk tolerances and
that the shares purchased in the referenced financings were conducted
at a significant
discount to the IPO price, if true.
Our strengths , page 4
15. Please balance your disclosure by adding a discussion of serious
adverse events and
deaths caused by treatment with AN2025.
Vicky Zhang
FirstName LastNameVicky Zhang
Adlai Nortye Ltd.
Comapany
January 18,NameAdlai
2023 Nortye Ltd.
January
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Summary of risk factors, page 6
16. Please revise your summary risk factors relating to your operations in
the PRC to disclose
the risks that your corporate structure and being based in or having
the majority of the
company s operations in China poses to investors. In particular,
describe the significant
regulatory, liquidity, and enforcement risks with cross-references to
the more detailed
discussion of these risks in the prospectus. For example, specifically
discuss risks arising
from the legal system in China, including risks and uncertainties
regarding the
enforcement of laws and that rules and regulations in China can change
quickly with little
advance notice; and the risk that the Chinese government may intervene
or influence your
operations at any time, or may exert more control over offerings
conducted overseas
and/or foreign investment in China-based issuers, which could result
in a material change
in your operations and/or the value of the securities you are
registering for sale.
Acknowledge any risks that any actions by the Chinese government to
exert more
oversight and control over offerings that are conducted overseas
and/or foreign investment
in China-based issuers could significantly limit or completely hinder
your ability to offer
or continue to offer securities to investors and cause the value of
such securities to
significantly decline or be worthless.
Conventions that apply to this prospectus, page 11
17. We note that your definition of China and the PRC excludes Hong Kong,
Macau and
Taiwan. Revise your definition and disclosure to clarify that the
legal and operational
risks associated with operating in China also apply to any operations
in Hong Kong and/or Macau.
Risk Factors
Uncertainties with respect to the PRC legal system could materially and
adversely affect us.,
page 61
18. Given the Chinese government s significant oversight and discretion
over the conduct of
your business, please revise to highlight separately the risk that the
Chinese government
may intervene or influence your operations at any time, which could
result in a material
change in your operations and/or the value of the securities you are
registering. Also,
given recent statements by the Chinese government indicating an intent
to exert more
oversight and control over offerings that are conducted overseas
and/or foreign investment
in China-based issuers, acknowledge the risk that any such action
could significantly limit
or completely hinder your ability to offer or continue to offer
securities to investors and
cause the value of such securities to significantly decline or be
worthless.
Use of Proceeds, page 77
19. Although we note your statements that you intend to have broad
discretion over the use of
the net proceeds from the offering, please revise your use of proceeds
disclosure to
provide more granularity regarding the first bullet point, namely how
far in the
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FirstName LastNameVicky Zhang
Adlai Nortye Ltd.
Comapany
January 18,NameAdlai
2023 Nortye Ltd.
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development process you estimate that the proceeds will enable you to
reach, including
specific phases of clinical trials, if applicable. For example, please
indicate if you expect
to be able to fund the entirety of any ongoing or planned clinical
trials or phases without
raising additional capital. In this regard, we note your disclosure on
pages 47 and 86 of
the prospectus that while you believe, based on your current operating
plan, that following
the offering you will have sufficient cash on hand to fund operations
for at least the next
12 months you will require substantial additional capital to support
your business
operations in the future.
Change in auditor, page 94
20. You state herein that you provided a copy of the change in auditor
disclosure to Ernst
& Young, and requested it to furnish you with a letter addressed to
the SEC stating
whether it agrees with the above statements, and if not, stating the
respects in which it
does not agree. Please revise your filing to indicate whether you ever
obtained such a
letter and, if so, to file it as an exhibit to your document.
Business
Phase Ia trial in patients with advanced solid tumors by Novartis, page 106
21. Per the table, it appears that 34.9% of patients treated with AN2025
experienced deaths
and 43.4% experienced SAEs, for which 13.3% were drug related. Please
provide
clarification on the number of deaths determined to be drug-related,
and identify the types
of serious adverse events observed in the trials.
License and Collaboration Agreements, page 127
22. Please revise your disclosure to address the following:
On page 127, quantify the upfront payment paid to Novartis in
2018.
On page 129, you state that Roche will supply its atezolizumab for
use at no cost
"unless otherwise provided in the clinical supply agreement
supplement". Please
revise to describe the payment terms and obligations of the
agreement, including the
referenced supplement.
On page 130, in relation to the Biotime collaboration agreement,
include the payment
amounts in USD in addition to RMB and summarize the term and
termination
provisions of the agreement.
23. Please file as exhibits your agreements with Roche, MSD and Biotime.
Alternatively,
please provide an analysis supporting your determination that such
filing is not required.
See Item 601(b)(10) of Regulation S-K.
Management
Employment agreements and indemnification agreements, page 158
24. Please revise your disclosure in this section to include a summary of
the material terms of
the employment agreement between the company and each named executive
officer.
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FirstName LastNameVicky Zhang
Adlai Nortye Ltd.
Comapany
January 18,NameAdlai
2023 Nortye Ltd.
January
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Compensation of directors and executive officers, page 158
25. We note your disclosure in this section. Please confirm that
disclosure of compensation is
not required on an individual basis in the company's home country and
is not otherwise
publicly disclosed by the company.
Principal Shareholders , page 161
26. Please identify any natural persons who have or share voting and/or
dispositive power
with respect to the shares owned by the entities listed in your table
for Nortye Talent
Limited, Nortye International Limited and UNIQUE MARK VENTURES
LIMITED.
History of share capital, page 173
27. Please revise to disclose the nature of the relationship between you
and Lucy Zhang, the
only holder of ordinary shares.
Notes to the Consolidated Financial Statements
1. Corporate and Group Information, page F-8
28. You disclose that the Company and its subsidiaries now comprising the
Group "underwent
the reorganization as set out in the paragraph headed
Reorganization in the section
headed History, Development and Corporate Structure in the
Document (the
Reorganization )." You make similar reference to such separate
section on page F-9.
However, we were unable to locate a paragraph entitled
"Reorganization" and the
"History, Development and Corporate Structure" section appears to be
labeled "Corporate
History and Structure". Please revise your disclosures hereunder
accordingly.
29. We note your disclosure on page 63 regarding limitations on your PRC
subsidiary's ability
to pay dividends, which may impact your ability to pay dividends.
Please tell us your
consideration of providing the disclosures required by Rule 4-08(e) of
Regulation S-X as
well as the consolidated financial information of registrant (Schedule
I) required by Rule
5-04.
4. Revenue, page F-25
30. We note that revenue of $45.7 million for the year ended December 31,
2021 was derived
from the sale of intellectual property to Xiamen Biotime Biotechnology
Co., Ltd
(Biotime) pursuant to a collaboration agreement entered into on
November 15, 2021.
Your accounting policy disclosure on page F-21 states that revenue
from sales of
intellectual property is recognized when you have sold the rights to
the intellectual
property and after there is no future performance obligation to be
performed. Please
explain how the potential milestone payments and sales-based
royalties, as described on
page 130, were considered in determining the transaction price for
this collaboration
agreement. To the extent that you determined that this variable
consideration is fully
constrained, please disclose that fact. Please also ensure that you
have provided all of the
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FirstName LastNameVicky Zhang
Adlai Nortye Ltd.
Comapany
January 18,NameAdlai
2023 Nortye Ltd.
January
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disclosures required by IFRS 15, particularly those required by
paragraphs 119 and 126.
12. Financial Assets at FVTPL, page F-31
31. We note that your financial assets at fair value through profit or
loss (FVTPL) consist of a
wealth management product and a dual currency structured deposit.
Please address the
following:
Revise your disclosure herein to clearly describe the nature and
significant terms of
these products. In this regard, describe the type of instrument
(e.g., fixed-income
security, equity investment, derivative instrument, etc.), key
terms (e.g., maturity,
yield, etc.) and any related risks.
Ensure that your accounting policy disclosure for financial assets
at FVTPL relates
to the type of financial assets actually held.
Revise your fair value disclosures in Note 24 to provide the
disclosures required by
paragraph 93 of IFRS 13 as they specifically relate to Level 3
fair value
measurements.
15. Financial Liabilities at FVTPL, page F-34
32. We note your disclosure that upon the issuance of each series of
convertible redeemable
preferred shares, you designated Series B, C and D Preferred Shares
and Series B
Convertible Loans as financial liabilities measured at FVTPL and
recognized Series A
Preferred Shares as equity in accordance with the relevant IFRS. We
further note your
disclosure on page F-18 that financial liabilities are designated as
FVTPL only if the
criteria in IFRS 9 are satisfied. Please provide your analysis
supporting the accounting for
each of these instruments, including reference to the applicable IFRS
guidance.
19. Share Incentive Plan, page F-40
33. It appears that your tabular disclosure on page F-41 presents a
rollforward of the activity
in your share-based awards for the periods presented, while the tables
at the top of page F-
42 indicate the amount of share-based awards outstanding at each
period-end, segregated
by weighted average exercise price. In the interest of clarity, please
consider combining
these tables into a single rollforward or revise the tables on page
F-42 to clearly indicate
the nature of each line item.
General
34. We note your statements on pages 8 and 59 that you have been advised
by your PRC legal
counsel that you are not currently required to make any filing or
obtain any permissions or
approval from the CSRC and CAC in the PRC for the listing of the ADSs
on Nasdaq, nor
are you required to submit an application to the CSRC for approval
under the M&A
Rules. We also note your disclosure under Enforceability of Civil
Liabilities relating to
advice provided by Maples and Calder (Hong Kong) LLP, your legal
counsel as to
Cayman Islands law, and Han Kun Law Offices, your legal counsel as to
PRC law, on
Vicky Zhang
Adlai Nortye Ltd.
January 18, 2023
Page 8
matters governed by BVI and PRC law, respectively. Please revise your
registration
statement to comply with Item 10.G of Form 20-F in relation to the
foregoing. See also
Item 101(g)(2) of Regulation S-K and Rule 436 of Regulation C.
35. Please provide us with supplemental 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,
have presented or expect to present to potential investors in reliance on
Section 5(d) of the
Securities Act, whether or not you retained, or intend to retain, copies
of those
communications.
You may contact Jenn Do at 202-551-3743 or Angela Connell at
202-551-3426 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Jimmy McNamara at 202-551-7349 or Laura Crotty at 202-551-7614 with any
other
questions.
Sincerely,
FirstName LastNameVicky Zhang
Division of
Corporation Finance
Comapany NameAdlai Nortye Ltd.
Office of Life
Sciences
January 18, 2023 Page 8
cc: Ke Geng
FirstName LastName