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United States securities and exchange commission logo
June 13, 2023
Stephen Mahoney
President, Chief Financial and Operating Officer
Magenta Therapeutics, Inc.
300 Technology Square, 8th Floor
Cambridge, MA 02139
Re: Magenta
Therapeutics, Inc.
Registration
Statement on Form S-4
Filed May 15, 2023
File No. 333-271917
Dear Stephen Mahoney:
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
Questions and Answers About the Merger
Q: What are contingent value rights ("CVR")?, page 4
1. We note your disclosure
that, "[i]n April 2023, Magenta sold certain assets, including
intellectual property,
related to its product candidates MGTA-45, MGTA-145 and the
CD117 antibodies
including the clinical antibody that was used with MGTA-117, and is
continuing to explore
strategic alternatives related to its other assets." Please specify the
programs or pre-merger
assets held by Magenta the are covered by the CVR Agreement.
We note from your
disclosure on pages 253 and 254 that the April 2023 asset
sales included certain
up-front cash payments as well as future potential milestone
payments. Please
clarify whether or not any of the April 2023 asset sales by Magenta,
including future
milestone payments, are covered by the CVR Agreement.
Stephen Mahoney
FirstName LastNameStephen
Magenta Therapeutics, Inc. Mahoney
Comapany
June NameMagenta Therapeutics, Inc.
13, 2023
June 13,
Page 2 2023 Page 2
FirstName LastName
2. Please revise your disclosure to clarify the material terms of the CVR
Agreement, your
intentions with Magenta's pre-merger assets and describe any material
assets that either
have been sold or may be sold by Magenta pursuant to the CVR Agreement
or otherwise
advise.
The Companies
Magenta, page 10
3. You state here and on page 252 that in April 2023, Magenta sold
certain assets, related to
Magenta's prior product candidates. However, you also state that
Magenta is continuing to
explore strategic alternatives related to its "other assets." Given
your recent sales in April
2023, please revise your disclosure to clarify what you mean when you
state "other assets"
to specifically describe any material assets or otherwise advise.
Prospectus Summary, page 12
4. Please balance your discussion here, and on page 145, to disclose the
negative factors or
potential risks associated with your merger agreement that were
considered by the boards
of directors of Magenta and Dianthus, respectively, when each voted
to approve the merger agreement.
Risk Factors
Risks Related to the Merger
Some Magenta and Dianthus directors and executive officers have interests in
the merger..., page
28
5. We note your disclosure that "certain of Dianthus directors are
affiliated with investment
funds which hold an interest in Dianthus and are participating in the
Dianthus pre-
closing financing." Please update your disclosure here to identify the
directors and the
fund(s) they are affiliated with that are participating in the
pre-closing financing.
The Merger
Background of the Merger, page 133
6. Please revise your disclosure to identify the individuals who
negotiated the material terms
of the merger. For example only, we note your disclosure that
"Magenta's management,"
"participants" and certain "financial advisors" were part of the
negotiations related to the
merger.
7. We note your disclosure on page 136 discussing certain "Criteria" that
would be used to
evaluate any potential indications of interest. Please revise to more
specifically describe
the criteria proposed to assess potential counterparties. For example,
if you were looking
for parties with a product candidate that had achieved a specific
stage of development,
what stage was that? What were you looking for with respect to the
attractiveness of the
counterparty s technology and development pipeline? Additionally,
please discuss
whether the criteria and/or the prioritization of the criteria changed
over time.
Stephen Mahoney
FirstName LastNameStephen
Magenta Therapeutics, Inc. Mahoney
Comapany
June NameMagenta Therapeutics, Inc.
13, 2023
June 13,
Page 3 2023 Page 3
FirstName LastName
8. On page 140 you state that on March 21, 2023 representatives of
Wedbush communicated
to representatives of Dianthus Magenta's willingness to agree to a
traditional reverse
merger in exchange for an increase in the valuation attributed to
Magenta. Please include a
description of Dianthus' response to such communication.
9. We note your disclosure that "after reviewing all of the submitted
indications of interest,
the participants selected 12 indications of interest to prioritize and
invite to make
management and due diligence presentations." However, your disclosure
appears to only
disclose Parties A through D. Please update your disclosure to
describe the seven other
parties that were invited to make presentations. In addition, update
your existing
disclosure where you describe Parties A through D to provide
additional details about
each party, including a description of the general industry of the
company.
Opinion of Houlihan Lokey to the Magenta Board, page 154
10. Revise to provide additional information regarding how Houlihan Lokey
selected the
comparable companies and whether it excluded any comparable companies
that fit those
criteria.
11. Please explain the statement "Houlihan Lokey selected an implied
enterprise value
reference range for Dianthus of $150.0 million to $200.0 million,
which resulted in an
aggregate implied equity value reference range for Dianthus of $274.2
million to $324.2
million, and an implied per share reference range for Dianthus of
$4.75 to $5.62. Please
clarify how Houlihan Lokey arrived at the $150.0 million to $200.0
million range. For
example, did Houlihan Lokey use the mean, median, high or low value
from the
calculations of the comparable companies? Please explain what other
considerations
Houlihan Lokey deemed relevant and how they impacted Houlihan Lokey's
analysis.
12. We note your disclosure that [t]he Magenta Liquidation Analysis and
Houlihan Lokey s
selected companies analysis for Dianthus indicated an implied exchange
ratio reference
range of 4.42844313 to 5.33756289 shares of Magenta common stock for
each share of
Dianthus capital stock, as compared to the exchange ratio in the
merger pursuant to the
Merger Agreement of 3.88182949 shares of Magenta common stock for each
share of
Dianthus capital stock. Please revise to describe the conclusions
Houlihan Lokey reached
with respect to the implied exchange ratio as a result of such
comparisons.
The Merger Agreement, page 177
Potential Asset Sale, page 183
13. You state hereunder that in April 2023, Magenta entered into asset
purchase agreements
related to each of (i) MGTA-145, (ii) MGTA-45 and (iii) the CD117
antibodies, including
the clinical antibody that was used with MGTA-117. We note from
Magenta's Form 10-Q
for the period then ended that assets held for sale appears to consist
of only remaining lab
equipment (referring to page 15 therein). Please address the
following:
Tell us how you considered the guidance of ASC 205-20-45 in
determining whether
Stephen Mahoney
FirstName LastNameStephen
Magenta Therapeutics, Inc. Mahoney
Comapany
June NameMagenta Therapeutics, Inc.
13, 2023
June 13,
Page 4 2023 Page 4
FirstName LastName
discontinued operations accounting was appropriate for some or
all of the asset
purchase agreements for the drug candidates.
Further in this regard, noting the sale of MGTA-45 on April 7,
2023 (page 143), tell
us why you reported the $1.1 million recorded as other income as
of March 31, 2023
(referring to page 21 of the March 31, 2023 Form 10-Q), instead
of gain from
discontinued operations, is appropriate.
Dianthus' Business
DNTH103, page 281
14. Please update your disclosure to define C1s and clarify what you mean
when you state
you are targeting "Active C1s." In addition, please revise your
disclosure to clarify how
preventing further progression of the classical pathway cascade helps
severe autoimmune
and inflammatory diseases.
15. Please define all technical and scientific terms throughout the
business section, such as
"diplopia and ptosis" and "MAC formation" on first use.
16. We note your disclosure that "DNTH103 has the potential to become a
first-line, steroid-
sparing treatment option." Please revise your disclosure to clarify
what you mean when
you state "steroid-sparing treatment" or otherwise advise. We note
your disclosure
elsewhere appears to indicate that biologics such as IVIG or FcRn
inhibitors are currently
being use to treat gMG.
Dianthus' Pipeline of Next-Generation Complement Therapeutics, page 281
17. We note your pipeline table on page 281. Specifically, we note that
Dianthus appears to
currently only have an ongoing Phase 1 trial for DNTH103 yet your
pipeline table
includes five arrows under DNTH103, four of which appear to depict
completion of Phase
1 clinical trials. Progress arrows should be moved to clearly depict
the progress of each
candidate to date and should not encroach on phases not commenced.
Please amend the
table to properly reflect the current status of Dianthus' product
candidate.
18. The pipeline table includes two separate programs with the general
description
Additional Active Selective Complement Target that are all in
the early stages of
discovery. Please limit your table to product candidates that are
sufficiently material to
your business to warrant inclusion in your table. If these new targets
are material, identify
the indications and expand your disclosure elsewhere to identify more
specifically these
programs or candidates.
Dianthus First Product Candidate, DNTH103, page 286
19. We note your disclosure of trials relating to your product candidates
throughout this
section. Please revise to clarify whether each trial was powered for
statistical significance.
In addition, if a trial was powered for statistical significance
please provide p-values for
the results of each trial.
Stephen Mahoney
FirstName LastNameStephen
Magenta Therapeutics, Inc. Mahoney
Comapany
June NameMagenta Therapeutics, Inc.
13, 2023
June 13,
Page 5 2023 Page 5
FirstName LastName
20. We note your disclosure that, "[a]ccording to published scientific
literature, Dianthus
anticipates a significantly longer half-life in humans." Please update
your disclosure to
discuss the "specific literature" you are referring to.
21. We note your disclosure here and elsewhere in your registration
statement in which you
make statements related to potential safety and efficacy, which are
premature given the
stage of development of Dianthus' product candidates. For example, we
note your
disclosure here that DNTH103 has a "[m]ore favorable safety profile."
Please revise your
disclosure throughout your document, including but not limited to the
statement noted
above, to eliminate the implication that your product candidates have
been or will
ultimately be determined safe and/or effective or have demonstrated
safety and/or efficacy
for purposes of approval by the FDA or comparable agency.
22. We note your disclosure of a "representative experiment" for which
DNTH103 was
compared to "recombinantly-generated" sutimlimab and ravulizumab that
were based on
amino acid sequences from patent filings." Please clarify what
"recombinantly-generated
based off of patent filings" means and describe any risks to using
"recombinantly-
generated" sutimlimab and ravulizumab in your experiment or otherwise
advise. In
addition, please update your disclosure to clarify that the results in
the "representative
experiment" may not be predictive of or consistent with the results of
later trials.
License Agreements
Zenas BioPharma, page 296
23. Please file your license agreement with Zenas BioPharma Limited as an
exhibit to your
filing, or provide us with your updated analysis as to why it need not
be filed under Item
601 of Regulation S-K.
Management Following the Merger
Executive Officers and Directors, page 349
24. Please revise your disclosure regarding the background and history of
your executive
officer and director to comply with Item 401(e)(1) of Regulation S-K.
Specifically, revise
your disclosure to describe the business experience, principal
occupations and
employment, of Anne McGeorge during the past five years, including the
dates and
duration of their employment.
Unaudited Pro Forma Condensed Combined Financial Information, page 365
25. You disclose on page 365 that the merger is expected to be treated as
a reverse
recapitalization because on the effective date of the merger, the
pre-combination assets of
Magenta are expected to be primarily cash and cash equivalents and
marketable
securities. Please address the following:
Tell us and revise your pro forma narrative and MD&A to more
clearly disclose the
extent to which you expect there to be any residual research and
development
activities and expenses or facilities expense continuing in
Magenta after the sale of
Stephen Mahoney
FirstName LastNameStephen
Magenta Therapeutics, Inc. Mahoney
Comapany
June NameMagenta Therapeutics, Inc.
13, 2023
June 13,
Page 6 2023 Page 6
FirstName LastName
certain assets under the April 2023 asset purchase agreements.
If so, explain how you considered this fact as part of your
determination that Magenta
will be a shell company for purposes of reverse recapitalization
treatment.
Tell us how you considered the potential future revenue streams
associated with the
asset purchase agreements including milestone and royalty
payments in your
determination that the company will be a shell company for
purposes
of recapitalization accounting.
Tell us how you considered the Contingent Value Right (CVR)
agreements
associated with the asset purchase agreements in determining that
the company will
be a shell company for purposes of recapitalization accounting.
26. You disclose that you expect the merger to be treated as a reverse
recapitalization and
such accounting is reflected in the pro forma financial information.
Given the asset
purchase agreements and CVR are central to the consideration of
whether Magenta will
effectively be a shell company as of the merger date and appear to be
significant, tell us
how you determined that it was appropriate under Article 11 of
Regulation S-X not to give
effect to the asset purchase agreements and the CVR in the pro forma
financial
information. As part of your response, specifically explain how you
determined whether
these arrangements represent the disposition of a business under the
guidance of Section
11-01(a)(4) of Regulation S-X.
General
27. We note the disclosure that the merger is " intended to qualify as a
reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended
(the Code ) for U.S. federal income tax purposes. Please
revise to clarify the tax
consequences of the merger to investors and file a tax opinion. For
guidance, please refer
to Staff Legal Bulletin No. 19.
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 Jenn Do at 202-551-3743 or Kevin Vaughn at 202-551-3494
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.
Stephen Mahoney
Magenta Therapeutics, Inc.
June 13, 2023
Page 7
Sincerely,
FirstName LastNameStephen Mahoney
Division of Corporation Finance
Comapany NameMagenta Therapeutics, Inc.
Office of Life Sciences
June 13, 2023 Page 7
cc: Marianne Sarrazin, Esq.
FirstName LastName