View:
United States securities and exchange commission logo
February 15, 2024
Shahraab Ahmad
Chairman and Chief Executive Officer
Atlantic Coastal Acquisition Corp. II
6 St Johns Lane, Floor 5
New York, NY 10013
Re: Atlantic Coastal
Acquisition Corp. II
Registration
Statement on Form S-4
Filed January 19,
2024
File No. 333-276618
Dear Shahraab Ahmad:
We have reviewed your
registration statement and have the following comments.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe a comment applies 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 this letter, we may have additional comments.
Registration Statement on Form S-4, filed January 19. 2024
Cover Page
1. Please disclose the
ownership interests in the combined company of (i) the Sponsor and its
affiliates and (ii)
ACAB's other current stockholders.
Questions and Answers About the Business Combination, page 5
2. Please revise this
section as well as the Summary section, where appropriate, to include a
discussion of the
combined company's liquidity position following the Business
Combination. In your
revisions, please describe and quantify the payments required to be
made by the combined
company following the Business Combination, including
transaction expenses,
as well as any other debt obligations of the combined company,
including unpaid
license agreement obligations. Please also include amounts that may
become payable pursuant
to legal proceedings or other disputes. In your discussion, please
include disclosure
regarding the combined company's liquidity position if the Available
Closing Cash condition
is waived. Please also reflect your disclosure elsewhere in the
Shahraab Ahmad
FirstName LastNameShahraab Ahmad
Atlantic Coastal Acquisition Corp. II
Comapany15,
February NameAtlantic
2024 Coastal Acquisition Corp. II
February
Page 2 15, 2024 Page 2
FirstName LastName
registration statement indicating that there is substantial doubt as
to Abpro's ability to
continue as a going concern within one year after September 30, 2023
and describe how
far Abpro expects to reach in development with the proceeds from the
Business
Combination at the various redemption levels detailed in your
sensitivity analysis.
3. Please revise to include a Q&A describing the post-business
combination ownership of
the combined company. In your revisions, please include a sensitivity
analysis disclosing
ownership percentages at various redemption levels. Please also revise
to disclose all other
possible sources and extent of dilution that stockholders who elect
not to redeem their
shares may experience in connection with the Business Combination.
Provide disclosure
of the impact of each significant source of dilution including the
amount of equity held by
the Sponsor, earn-out shares, convertible securities, including
warrants retained by
redeeming shareholders, at each of the redemption levels detailed in
your sensitivity
analysis, including any needed assumptions.
4. Please revise this section to include a Q&A disclosing the management
and directors of
the post-business combination company.
What Will Abpro Stockholders Receive in the Business Combination?, page 5
5. Please revise here to include ACAB's pre-money equity valuation of
Abpro in the
Business Combination and the amount of stock that will be issued in
relation to the
valuation. Please also revise to discuss the Earn-out Shares.
How is the Payment of the Deferred Underwriting Commissions...?, page 10
6. Please revise your response to this question to clarify if Cantor
provided a reason for
reducing its underwriting fees and, if so, what that reason was.
Please also clarify if
Cantor is currently acting, or previously acted, as a financial
advisor to ACAB in
connection with the Business Combination.
Do Any of ACAB's Directors or Officers Have Interests..., page 12
7. Please quantify the aggregate dollar amount and briefly describe the
nature of what the
Sponsor and its affiliates have at risk that depends on completion of
a business
combination. Include the current value of securities held, loans
extended, fees due and
out-of-pocket expenses for which the sponsor and its affiliates are
awaiting
reimbursement. Provide similar disclosure for the company s officers
and directors, if
material.
Summary, page 16
8. Please revise the Summary to include an organizational chart depicting
the parties to the
transaction both prior to and after the Business Combination.
9. Please revise this section to disclose the current status of the PIPE
Financing.
Shahraab Ahmad
FirstName LastNameShahraab Ahmad
Atlantic Coastal Acquisition Corp. II
Comapany15,
February NameAtlantic
2024 Coastal Acquisition Corp. II
February
Page 3 15, 2024 Page 3
FirstName LastName
Interests of ACAB's Directors and Executive Officers in the Business
Combination , page 18
10. We note your statement indicating that certain of ACAB's officers and
directors
collectively own a material interest in the Sponsor. Please revise to
disclose the officers
and directors who own the material interest and the nature of this
interest.
Other Agreements, page 23
11. Please revise to disclose the number of shares that will be covered by
(i) lock-up
agreements and (ii) registration rights agreements, in each case,
following the
consummation of the Business Combination.
Risk Factors
If we are unable to obtain or protect intellectual property rights..., page 50
12. Please revise this risk factor to disclose which of your product
candidates and
technologies are covered by march-in rights.
We have concluded that our disclosure controls and procedures were not
effective..., page 72
13. Please revise this risk factor to disclose the nature of the material
weaknesses that existed
in Abpro's internal control over financial reporting as of December
31, 2022 and to
identify the remedial actions taken, if any, to address the material
weaknesses.
If we are deemed to be an investment company under the Investment Company
Act..., page 73
14. We note your disclosure on page 74 that the assets in the Trust
Account were previously
invested in securities, including U.S. Government securities or shares
of money market
funds meeting certain conditions under Rule 2a-7 of the Investment
Company Act. Please
also disclose that if you are found to have been operating as an
unregistered investment
company, you may be required to change or wind down your operations.
Also include
disclosure with respect to the consequences to investors if you are
required to wind down
your operations as a result of this status, such as the loss of the
investment opportunity in
a target company, any price appreciation in the combined company and
any warrants,
which would expire worthless.
We have identified ineffective disclosure controls and procedures that..., page
75
15. We note the discussion that "disclosure controls and procedures were
not effective as of
September 30, 2023 due to the Company not filing timely tax returns
and utilizing cash
withdrawn from the trust account for tax obligations for operating
purposes." Please revise
to clarify whether such situation constitutes a material weakness,
whether remedial actions
have begun and, if so, the nature and extent of such actions.
The Proposed Charter and the Post-Combination Company's bylaws will provide...,
page 98
16. Please revise this risk factor to disclose the possibility that your
exclusive forum provision
Shahraab Ahmad
FirstName LastNameShahraab Ahmad
Atlantic Coastal Acquisition Corp. II
Comapany15,
February NameAtlantic
2024 Coastal Acquisition Corp. II
February
Page 4 15, 2024 Page 4
FirstName LastName
may result in increased costs for investors to bring a claim.
Unaudited Pro Forma Condensed Combined Financial Information
Description of the Business Combination, page 102
17. We note the discussion here and on page 103 where you discuss the
components of the
Business Combination Consideration. Please revise to provide your
calculation of the total
purchase price consideration hereunder or in the accompanying notes to
the pro forma
financial statements.
Other Related Events in Connection with the Business Combination, page 103
18. We note the disclosure that the PIPE Investment is contemplated to
take place in
connection with the Business Combination. Please revise this
discussion to describe how
management has concluded the PIPE Investment is probable and
appropriate for inclusion
under Rule 11-02(a)(6)(i)(A) of Regulation S-X.
Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined
Balance
Sheet as of September 30, 2023, page 109
19. It appears adjustment (7) refers to Cantor's Reduced Deferred Fee as
further described on
pages 296-297. If so, please revise this disclosure to more fully
explain the facts and
circumstances surrounding the settlement or to provide a cross
reference to the applicable
section explaining such facts and circumstances.
Management of ACAB
Executive Compensation, page 153
20. Please revise to provide executive compensation information for the
fiscal year ended
December 31, 2023.
Information About Abpro
Overview, page 165
21. You disclose that you received "an upfront payment and an equity
investment, each in the
single digit millions of dollars, in connection with" the
collaboration agreement with
Celltrion. Please disclose the exact amount of the upfront payment and
equity investment
received. Clarify here and in the footnotes on pages F-58 and F-84
whether the "upfront
payment" is the same as the "first milestone" of $2.0 million achieved
as disclosed in
those footnotes. Finally, revise the footnotes to specifically address
the nature and extent
of the equity investment.
22. Please remove your statements here and throughout that (i) ABP-102 is
expected to have
peak annual revenue of approximately $800 million, (ii) that ABP-201
is expected to have
peak annual revenue of approximately $900 million and (iii) the
risk-adjusted present
value of future revenue from both assets combined is approximately
$1.2 billion and the
Shahraab Ahmad
FirstName LastNameShahraab Ahmad
Atlantic Coastal Acquisition Corp. II
Comapany15,
February NameAtlantic
2024 Coastal Acquisition Corp. II
February
Page 5 15, 2024 Page 5
FirstName LastName
peak risk-adjusted revenue is expected to be approximately $570
million as
these statements are premature given Abpro's current stage of
development.
23. We note your disclosure indicating that Abpro granted Abpro Bio
exclusive development
and commercialization rights to ABP-201 "in certain countries
primarily in Asia and the
Middle East." Please revise to disclose the countries where Abpro Bio
has exclusive
development and commercialization rights.
24. We note your statements here and on page 173 that as "validation" of
Abpro's platform,
Abpro's technology has been used to generate high quality antibodies
for global
pharmaceutical and research institutions. Please revise to clarify if
you are referring to
antibodies other than the four candidates that appear in Abpro's
pipeline table. To the
extent that you are referencing additional antibodies, please identify
these antibodies and
clarify if any of them are currently being evaluated in clinical
trials.
ABP-102: Next generation T-cell engager targeting HER2 and CD3 for HER2+ solid
tumors,
page 166
25. We note your statement that ABP-102 has the potential to provide
longer lasting or even
curative results. Please revise to provide the basis for this
statement. To the extent that this
statement is based on management's belief, please so state.
26. We note your statement that Abpro has designed ABP-102 as a "highly
potent"
therapeutic agent. Please revise to remove any statements that
indicate ABP-102 or
Abpro's other product candidates are or will be potent or efficacious.
In that regard, we
also note your statements on page 168 indicating that ABP-201 could
potentially provide
"increased efficacy over current agents" and on page 176 that your
product candidate has
"enhanced potential potency." You may discuss the results of Abpro's
preclinical
studies without claiming potency or efficacy.
ABP-201: Ligand trap targeting VEGF and ANG-2 for vascular diseases of the eye,
page 168
27. Please revise this section to reflect your disclosure elsewhere in the
registration statement
that Abpro in-licensed certain IP rights relating to ABP-201 from
MedImmune Limited
and that Abpro is currently in breach of the license agreement.
Our Pipeline, page 169
28. Please revise the pipeline table so that there are no more than two
preclinical columns.
Please also revise to include separate Phase 1, Phase 2 and Phase 3
columns.
Our Strategy, page 169
29. We note your statement that Abpro's antibody platforms and approach
overcome certain
of the limitations associated with traditional methods of creating and
validating
antibodies. Please revise to clarify, if true, that you have yet to
(i) produce antibodies the
scale needed for clinical trials or commercialization and (ii)
evaluate any of your product
Shahraab Ahmad
FirstName LastNameShahraab Ahmad
Atlantic Coastal Acquisition Corp. II
Comapany15,
February NameAtlantic
2024 Coastal Acquisition Corp. II
February
Page 6 15, 2024 Page 6
FirstName LastName
candidates in a patient.
30. We note your statements that Abpro plans initiate clinical trials of
ABP-102 and ABP-201
in the second half of 2025. Please revise to clarify what steps, if
any, Abpro needs to
complete prior to initiating clinical trials for these product
candidates. In your revisions,
please clarify whether Abpro has held pre-IND meetings or otherwise
communicated with
the FDA or applicable foreign regulators regarding its current product
candidates.
DiversImmune : Our antibody discovery platform , page 172
31. Please revise to provide support for your statement that Abpro is
using its platform to
create an "industry-leading" collection of building blocks. To the
extent this claim is
based on management's belief, please so state.
Key advantages of our antibody technology platforms, page 174
32. Please revise your disclosure in the second bullet of this section to
clarify, if true, that any
product candidate developed with Abpro's platforms will still be
subject to clinical trial
requirements prior to approval and that Abpro cannot accelerate
clinical trials.
Advantages of TetraBi antibodies over CAR T therapy, page 177
33. Please revise throughout this section to clarify, if true, that Abpro
has yet to observe any
advantages of TetraBi antibodies in a clinical trial and that TetraBi
antibodies have not yet
received marketing approval.
Potential competitive advantages of ABP-102 versus approved anti-HER2
therapies, page 178
34. Please revise your graphic on page 179 to remove any implication that
ABP-102 will be
found to be safe or effective and to remove claims that it will be
safer or more effective
than existing approved therapies. Please similarly revise your graphic
on page 185.
Potential benefits of ABP-201 in ophthalmology, page 186
35. Please revise this section to remove statements or implications that
ABP-201 will
demonstrate increased efficacy relative to approved therapies.
In-licensing agreements
AstraZeneca, page 191
36. We note your disclosure that Abpro is obligated to pay tiered
high-single to low "double-
digit" percentage royalties pursuant to its agreement with
AstraZeneca. Please revise so
that the potential royalty range does not exceed 10 percentage points.
NJCTTQ, page 193
37. We note your disclosure that Abpro entered into a collaboration
agreement in January
2019 with NJCTTQ and that the agreement had an initial five year term.
Please revise to
Shahraab Ahmad
FirstName LastNameShahraab Ahmad
Atlantic Coastal Acquisition Corp. II
Comapany15,
February NameAtlantic
2024 Coastal Acquisition Corp. II
February
Page 7 15, 2024 Page 7
FirstName LastName
disclose whether the agreement was renewed. Please also clarify
whether any of the
product candidates or technologies discussed elsewhere in the
prospectus are subject to
this agreement.
Employees, page 206
38. You disclose that as of December 2023 you have 21 full-time employees
and one part-
time employee. The risk factor on page 45 states there are 22
full-time employees. Please
revise as necessary.
Abpro Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview, page 208
39. Please remove your statement that Abpro's antibodies are potentially
"best-in-class" as this
statement appears to be premature given Abpro's current stage of
development. You may
state that Abpro's antibodies are differentiated from other antibody
product candidates, if
true.
Results of Operations, page 209
40. You state on page 209 that research and development expenses decreased
"primarily due
to a decrease of $4.9 million in research and development costs
associated with the
research programs related to SARS-CoV-2 recognized during the nine
months ended
September 30, 2022". On page 210, you indicate that the increase in
research and
development expenses of $1.1 million during 2022 was "primarily due to
the increase in
outsourced research and development services costs of $1.8 million
associated with the
research programs related to SARS-CoV-2." Please revise to clarify to
which "research
programs related to SARS-CoV-2" you refer, as we note the following
disclosures:
The pipeline does not appear to include a candidate/program
related to SARS-CoV-
2/COVID (page 169);
"Abpro seeks to develop COVID antibodies" (page 190);
The Mabwell License Agreement resulted in development activities
that were
"immaterial to the condensed consolidated financial statements"
as of September 30,
2023 (page F-60) and as of December 31, 2022 (page F-87); and
You recorded $0 and $200 as research and development expenses as
of September
30, 2023 (page F-61) and December 31, 2022 (page F-88),
respectively, pursuant to
the VAZYME License Agreement.
41. Please revise to provide more detail for your research and development
expenses for each
period presented, including but not limited to, by product candidates
and/or by indication
or program, as well as by the nature of the expenses.
Liquidity, Capital Resources and Going Concern, page 211
42. Please revise this section to disclose how far Abpro expects to reach
in development with
the proceeds from the Business Combination. In your revisions, please
discuss the various
Shahraab Ahmad
FirstName LastNameShahraab Ahmad
Atlantic Coastal Acquisition Corp. II
Comapany15,
February NameAtlantic
2024 Coastal Acquisition Corp. II
February
Page 8 15, 2024 Page 8
FirstName LastName
possible redemption levels and how they may impact on the combined
company's future
liquidity. Please also revise to disclose the amount of Abpro's
aggregate indebtedness, if
any, as of the most recent practicable date.
Background of the Business Combination, page 231
43. Please revise this section to disclose the valuation ascribed to Abpro
in the Business
Combination. In your revisions, please also describe the negotiations
related to Abpro's
valuation and whether ACAB's management and/or board of directors used
any qualitative
or quantitative metrics to formulate or support Abpro's valuation.
44. We note your disclosure on page 237 indicating that Calabrese will be
entitled to a fee for
its role as a financial consultant to ACAB. Please revise the
Background of the Business
Combination section to disclose the role that Calabrese played in the
negotiation of the
Business Combination.
45. Please revise this section to describe negotiations related to the
PIPE Financing as well as
the current status of the PIPE Financing.
Recommendation of the ACAB Board and Reasons for the Business Combination, page
234
46. Please revise the "Attractiveness Compared to Industry Peers"
paragraph to disclose the
precedents that were used in the analysis. To the extent that ACAB's
board considered a
comparable company analysis in making its decision, please present
this analysis in the
proxy statement/prospectus. Similarly revise the "Financial Condition"
paragraph to
disclose the mergers and acquisitions considered.
Potential Purchases of Public Shares, page 239
47. We note your statements that your Sponsor, directors, officers,
advisors or any of their
respective affiliates may purchase public shares in
privately-negotiated transactions. We
further note your disclosure that these purchases may be effected at
purchase prices that
are in excess of the per share pro rata portion of the Trust Account
and that the purpose of
any such purchases could be to vote shares in favor of the Business
Combination or satisfy
a closing condition in the Business Combination Agreement. Please
provide your analysis
on how such purchases comply with Rule 14e-5. To the extent that you
are relying on
Tender Offer Compliance and Disclosure Interpretation 166.01 (March
22, 2022),
available on our public website, please provide an analysis regarding
how it applies to
your circumstances. Revise your disclosure here and throughout as
appropriate for
consistency.
Abrpro Financial Statements
Note 7. Commitments and Contingencies, page F-62
48. You indicate that $833,000 and $354,000 was accrued for within
accounts payable as of
September 30, 2023, related to the settlement with the CRO vendor and
"potential
Shahraab Ahmad
Atlantic Coastal Acquisition Corp. II
February 15, 2024
Page 9
litigation related to disputed invoices with vendors", respectively. You
also disclose there
was no exposure to loss in excess of the amounts that have been accrued
as of that date.
Please revise to address whether any amounts related to the MSK
settlement aggregating
$1.2 million as discussed on page 207 have been accrued for or disclose
why they have
not been accrued.
49. We note the risk factor disclosure on page 39 of the license agreement
with
MedImmune/AstraZeneca which provided for a research plan with target
dates for an IND
application (July 2021) and Phase II commencement (December 2022).
However, we
note these target dates were not met, which gives MedImmune/AstraZeneca
a termination
right. Please revise to quantify the potential impact of this right
should
MedImmune/AstraZeneca so terminate.
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.
Please contact Jenn Do at 202-551-3743 or Kevin Kuhar at 202-551-3662 if
you have
questions regarding comments on the financial statements and related matters.
Please contact
Tamika Sheppard at 202-551-8346 or Alan Campbell at 202-551-4224 with any other
questions.
Sincerely,
FirstName LastNameShahraab Ahmad
Division of
Corporation Finance
Comapany NameAtlantic Coastal Acquisition Corp. II
Office of Life
Sciences
February 15, 2024 Page 9
cc: Stephen C. Ashley, Esq.
FirstName LastName