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United States securities and exchange commission logo
March 28, 2024
Robert Ragusa
Chief Executive Officer
GRAIL, LLC
1525 O Brien Drive
Menlo Park, California 94025
Re: GRAIL, LLC
Amendment No. 2 to
Draft Registration
Statement on Form 10-12B
Submitted March 11,
2024
CIK No. 0001699031
Dear Robert Ragusa:
We have reviewed your amended draft registration statement and have
the following
comment(s).
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 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 the information you provide in response to this
letter and your amended
draft registration statement or filed registration statement, we may
have additional
comments. Unless we note otherwise, any references to prior comments are
to comments in our
February 26, 2024 letter.
Amendment No. 2 to Draft Registration Statement on Form 10-12B
Summary
Our mission is to detect cancer early, when it can be cured., page 2
1. We note your responses
to comments 1 and 2, and reissue these comments in part. In this
regard, please revise
your summary so that it is clear and prominent to investors that you
do not produce or
market a diagnostic test, but rather, a cancer screening test, and that this
test has not been
approved by the FDA. Please also make it clear and prominent that your
future business and
commercialization plans include FDA approval. In your revised
disclosure, please
address the following comments:
Robert Ragusa
FirstName LastNameRobert Ragusa
GRAIL, LLC
Comapany
March NameGRAIL, LLC
28, 2024
March2 28, 2024 Page 2
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FirstName LastName
At first instance, where you disclose that you believe Galleri
is clinically validated,
please revise your disclosure to make it clear that the Galleri
test has not been
approved by the FDA or an equivalent foreign regulator, and that
the Galleri test has
been validated as a screening test rather than a diagnostic test.
In this regard, where
you discuss "detection" by Galleri, please ensure that it is
clear that this detection
required additional diagnostic testing.
Where you make claims about the accuracy of your Galleri test,
including at first
instance, please provide data to support your claims, or include
a cross reference to
the data elsewhere in your filing. Please also clarify that
"accuracy" in this context
does not mean that the Galleri test itself was used to provide a
cancer diagnosis. In
addition, please provide additional context for your statement
that "we estimate that
by adding Galleri to the five standard of care single-cancer
screening tests (breast,
cervical, colorectal, lung cancer, and prostate), there is
potential to detect many more
cancers at an earlier stage, which could translate into the
potential to avert
approximately 100,000 deaths per year in the United States as
measured by five-year
survival, or 39% of the five-year deaths expected if not for
early detection by
Galleri," including that there is no guarantee Galleri will be
added to the current
standard of care screening.
2. We note your response to comment 3 and your revised disclosure that
your DAC test is a
"medium- to longer-term objective." Please revise your disclosure to
provide an estimated
timeframe for "medium- to longer-term."
Risks Relating to Our Business and Industry
We may be unable to develop and commercialize new products, including enhanced
versions of
current products., page 41
3. We note your revised disclosure in response to previous comment 6
regarding bridging
studies for new or enhanced versions of your current products and
re-issue the comment in
part. Your response to comment 11 from our January 8, 2024 comment
letter, included in
your January 29, 2024 response letter:
noted that "in the near term, enhancements are focused on
improvements to Galleri
and, in particular, on automation, panel size, and other scaling
improvements and
updates to the machine-learning classifier" and that "[f]uture
enhancements may also
include a reduction in panel size to enable additional scaling,
as well as further
training of the classifier on additional data for potential
future improvement;"
in addition to bridging studies, discussed the need to conduct
"a non-inferiority study
compared to the relevant current version of Galleri using
clinical study and real world
evidence data (obtained through Galleri s current commercial
use as an LDT);"
explained that because of the bridging study, "the Company does
not believe the
Robert Ragusa
FirstName LastNameRobert Ragusa
GRAIL, LLC
Comapany
March NameGRAIL, LLC
28, 2024
March3 28, 2024 Page 3
Page
FirstName LastName
changes will impact the Company s ability to rely on
previously-collected data
generated from earlier versions of the Company s products;" and
also noted that "[a]s a contingency plan, if non-inferiority or
non-concordance cannot
be established, the Company can revert to the prior classifier
and version of the test
used in the existing version of Galleri."
Please include similar disclosure in the Information Statement when
discussing potential
enhanced versions of your products, or otherwise briefly explain what
changes or
improvements you expect to make to the enhanced versions of your
current products, and
if you believe these changes will impact your ability to rely on
previously-collected data
on earlier versions of your products in connection with your
submission for marketing
authorization (or certification) of your products.
Risks Relating to Regulation and Legal Compliance
Our multi-cancer detection tests are a new approach to cancer screening, which
present a number
of novel and complex issues..., page 61
4. We note your revised disclosure in response to previous comment 7 and
re-issue the
comment in part. In your January 29, 2024 response letter, you noted
that "following
several pre-submissions to the FDA regarding the Company s proposed
clinical studies,
and a meeting with the FDA in June 2023, the Company received feedback
on several
aspects of the clinical validation pathway for Galleri PMA. First, the
FDA will permit the
number of cancer-type specific clinical samples required for the
Company s proposed
cancer type claims to be based on the prevalence of each particular
cancer type in the
intended use population. Second, the FDA will not require the Company
to perform
a head-to-head comparison of Galleri and standard of care screening
methods as a
prerequisite for PMA approval, and will instead address such
comparative data as part of
labelling or at a later date. Third, the FDA will permit GRAIL to
return results to ordering
providers on any cancer signal of origin detected by Galleri,
regardless of whether GRAIL
has sufficient clinical evidence for an affirmative claim for that
cancer type." Please
include this information in your disclosure as it provides important
context to the risk
that it is difficult to predict what information you will need to
submit to obtain approval of
a PMA from the FDA. Alternatively, please advise us why you do not
believe this
information is material or should be disclosed in the Information
Statement.
Reasons for the Spin-Off, page 100
5. We note the removal of references to outside advisors from the
Information Statement in
response to previous comment 8 and re-issue the comment in part. With
respect to
any information and analyses from outside advisors that the Illumina
board has already
received and that have aided the board in its consideration of
strategic alternatives, please
provide a more detailed legal analysis describing why the reports and
recommendations
provided by these outside advisors are not material to the board s
decision. If the board is
Robert Ragusa
GRAIL, LLC
March 28, 2024
Page 4
still evaluating potential divestment transactions and has not made a
final determination to
move forward with the Spin-Off, please note this in your next response
letter and provide
any materiality analysis in the context of the board's ultimate
decision once known. To the
extent that the board receives additional information and analyses
from outside advisors in
connection with its evaluation of the Spin-Off, including with respect
to any final
determination to move forward with the Spin-Off rather than any of the
other potential
divestment transactions, please include disclosure regarding the third
party advisors and
their recommendations in a subsequent amendment or provide us with a
legal analysis
describing why this information is not material.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Research and Development and Research and Development Related Parties, page
181
6. We note your revised disclosure that you expect your research and
development expenses
to plateau over the coming years as your existing clinical studies and
development of your
automated platform conclude. Please revise your disclosure to provide
an estimated
timeframe for "the coming years."
Goodwill Impairment, page 182
7. We note your disclosure that "[i]n the third quarter of 2023, we
concluded the sustained
decrease in Illumina s stock price and overall market capitalization
during the quarter was
a triggering event indicating the fair value of GRAIL might be less
than its carrying
amount that led us to test goodwill for impairment," and "[w]e
recognized an additional
goodwill impairment of $608.5 million in 2023 primarily due to changes
to expected
timing of revenue and a higher discount rate." Please revise your
filing to provide a risk
factor discussing the risks associated with this impairment and
possible future
impairments or explain why you do not believe a risk factor is
warranted.
Results of Operations, Comparison of Fiscal Year 2023 to Fiscal Year 2022
Screening Revenue and Screening Revenue Related Parties, page 184
8. We reference the 90% increase in revenue from fiscal year 2022 to
fiscal year
2023. Please revise to provide greater insight into the contributors
to the significant
increase in revenue, including the underlying reasons for the increase
in Galleri sales
volume. Reference Item 303(a)-(b) of Regulation S-K and the three
principal objectives of
MD&A, as noted in SEC Release No. 33-8350.
Development Services Revenue, page 184
9. We note your disclosure that "[t]he increase in development services
revenue of
FirstName LastNameRobert Ragusa
$2.4 million was primarily due to new pilots initiated with
biopharmaceutical partners in
Comapany
fiscalNameGRAIL,
year 2023." InLLC
an appropriate place in your filing, please
describe the terms of these
March pilots withPage
28, 2024 biopharmaceutical
4 partners, if material.
FirstName LastName
Robert Ragusa
FirstName LastNameRobert Ragusa
GRAIL, LLC
Comapany
March NameGRAIL, LLC
28, 2024
March5 28, 2024 Page 5
Page
FirstName LastName
Non-GAAP Financial Measures, page 190
10. We note your response to comment 14. You state that the bonuses were
allocated amongst
all employees in good standing below the executive leadership team
level and that no
additional services were required to be provided by the employees
above and beyond their
normal employment compared to other similar roles and
responsibilities. Therefore, it
appears that these costs represent cash compensation, which is a
normal, recurring
operating expense. As such, we request that you discontinue including
this adjustment in
your non-GAAP measures for any period presented in accordance with
Rule 100(b) of
Regulation G as interpreted by Question 100.01 of the Non-GAAP
Financial Measures
Compliance & Disclosure Interpretations, as updated December 13, 2022.
Please contact Kristin Lochhead at 202-551-3664 or Terence O'Brien at
202-551-3355 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Conlon Danberg at 202-551-4466 or Katherine Bagley at 202-551-2545 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Industrial Applications and
Services
cc: Ross McAloon, Esq.