SecProbe.io

CORRESP
1
filename1.htm

              James C. T. Linfield

              +1 720 566 4010

              linfieldjct@cooley.com

              VIA EDGAR AND OVERNIGHT MAIL

    January 9, 2020

    U.S. Securities and Exchange Commission

    Division of Corporation Finance

    100 F Street N.E.

    Washington, D.C. 20549

    Attn:  Tim Buchmiller

            Re:

            NewLink Genetics Corporation

            Preliminary Proxy Statement on Schedule 14A

            Filed on November 20, 2019

            File No. 001-35342

    Dear Mr. Buchmiller:

    On behalf of NewLink Genetics Corporation (the “Company”), we are providing this letter in
      response to a letter, dated December 19, 2019, received from the staff of the U.S. Securities and Exchange Commission’s Division of Corporation Finance (the “Staff”) with respect to the
      Company’s Preliminary Proxy Statement on Schedule 14A, filed on November 20, 2019 (the “Preliminary Proxy Statement”). The Company is concurrently submitting an amended Preliminary Proxy
      Statement on Schedule 14A (the “Amended Preliminary Proxy Statement”), which reflects changes made in response to certain of the comments contained in such letter. We are also sending the
      Staff a copy of this letter, along with a copy of the Amended Preliminary Proxy Statement, which is marked to show the changes made to the Preliminary Proxy Statement.

    The numbering of the paragraphs below corresponds to the numbering of the comments in the letter received from the Staff, which for your convenience we
      have incorporated into this response letter in italics. Page references in the text of the Company’s responses set forth below correspond to the page numbers of the Amended Preliminary Proxy Statement. Capitalized terms used in this letter but not
      otherwise defined in this letter have the meanings assigned to them in the Amended Preliminary Proxy Statement.

    Preliminary Proxy Statement on Schedule 14A

    Summary

    The Companies, page 1

              1.

                It appears from your disclosure on page 27 that Lumos has not submitted an investigational new drug application (IND) for its planned Phase 2b trial of LUM-201
                  for the treatment of Pediatric Growth Hormone Deficiency (PGHD). If true, please revise your summary disclosure to discuss this fact. Please also place your discussion of LUM- 201 for the treatment of PGHD in appropriate context with
                  reference to the current clinical development status, including the following, as referenced on pages 25 and 27:

    •          Prior clinical trials were conducted by
        Merck in the 1990s;

      Cooley LLP   380 Interlocken Crescent   Suite 900   Broomfield, CO   80021-8023

        t: (720) 566-4000  f: (720) 566-4099  cooley.com

      U.S. Securities and Exchange Commission
      January 9, 2020

      Page Two

    •          Two of the Merck trials were
        discontinued prior to completion due to lack of efficacy;

    •          The active pharmaceutical ingredient to
        be used in the Phase 2b trial was manufactured approximately 15 years prior to the planned start of the trial and may not be approved for use the by the U.S. Food and Drug Administration; and

    •          Not all prior clinical data is
        available to Lumos for purposes of designing the planned Phase 2b clinical trial.

    Response: In response to the Staff’s comment, the Company has revised the disclosure on page 2 of the Amended Preliminary Proxy Statement.

              2.

                We note the disclosure on page 39 that Lumos does not have composition of matter protection in the United States or elsewhere covering LUM-201. If the chemical
                  structure of LUM-201 is in the public domain and Lumos does not own or license, and will not in the future own or license, any composition of matter patents claiming LUM-201, please revise your summary to state that LUM-201 is in the
                  public domain and provide a summary of the potential effects this could have on Lumos’ business. Please also include related disclosure, as appropriate, under “Intellectual Property” on page 115.

    Response: In response to the Staff’s comment, the Company has revised the disclosure on pages 2, 40 and 119 of the Amended Preliminary Proxy Statement.

              3.

                Based on your disclosure in the fifth bullet point on page 93, it appears that the merger could be conditioned upon approval of the reverse stock split. Please
                  revise your summary section to clarify if the merger is conditioned upon approval of the reverse stock split proposal.

    Response: In response to the Staff’s comment, the Company has revised the disclosure on page 3 of the Amended Preliminary Proxy Statement.

    Background of the Merger, page 59

              4.

                Please expand your discussion of the activities that took place during the External Opportunity Review to explain how you narrowed the field of strategic
                  partners from 30 companies to Lumos, Party B and Party C.

    Response: In response to the Staff’s comment, the Company has revised the disclosure on pages 60-61 of the Amended Preliminary Proxy Statement.

              5.

                Expand your discussion of the negotiation of the proposed merger to include disclosure of the initial consideration offered, and by which party, and how the
                  parties negotiated and determined the final form and amount of consideration agreed to in the merger agreement, and the amount of the termination fee. Clarify if Stifel made any recommendations regarding those terms.

    Response:  In response to the Staff’s comment, the Company has revised the disclosure on pages 61-64 of the Amended Preliminary Proxy Statement.

        Cooley LLP   380 Interlocken Crescent   Suite 900   Broomfield, CO   80021-8023

          t: (720) 566-4000  f: (720) 566-4099  cooley.com

          U.S. Securities and Exchange Commission
          January 9, 2020

          Page Three

              6.

                We note your disclosure on page 1 that you entered into a license and collaboration agreement with Merck to develop and potentially commercialize your Ebola
                  vaccine V920 product candidate. Please expand your disclosure to discuss how any future royalties you might be entitled to receive factored into your negotiations of the merger consideration offered to Lumos and how the potential for such
                  royalties factored into the board’s determination that the merger is in the best interests of NewLink and its stockholders. Please also clarify how the Merck Agreement factored into the analyses performed by Stifel.

    Response:  In response to the Staff’s comment, the Company has revised the disclosure on pages 63, 75 and 82 of the Amended Preliminary Proxy Statement.

              7.

                Please update your background discussion for any material developments or activities leading up to Evercel, Inc.’s filing of soliciting materials on December 13,
                  2019 and update your disclosure for further material developments as appropriate.

    Response:  In response to the Staff’s comment, the Company has revised the disclosure on pages 65-66 of the Amended Preliminary Proxy Statement.

    Opinion of NewLink’s Financial Advisor, page 69

              8.

                Please provide us supplementally with copies of all materials prepared by Stifel and shared with the NewLink board, including copies of all board books and all
                  transcripts and summaries, that were material to the board’s decision to approve the merger agreement and the transactions contemplated thereby.

    Response:  The Company acknowledges the Staff’s comment and advises the Staff that we have been advised by Stifel that the presentation materials
      prepared by Stifel and shared with the NewLink Board that were material to the NewLink Board’s decision to approve the Merger Agreement and the transactions contemplated thereby are being provided to the Staff under separate cover by Mintz, Levin,
      Cohn, Ferris, Glovsky and Popeo, P.C. (“Mintz”), counsel for Stifel, on a confidential and supplemental basis pursuant to Rule 12b-4 of the Exchange Act. We have been advised by Stifel that, in accordance with such Rules, it has requested that these
      materials be returned promptly following completion of the Staff’s review thereof, and that by separate letter, Mintz has also requested confidential treatment of these materials pursuant to the provisions of 17 C.F.R. § 200.83.

    Discounted Cash Flow Analysis, page 76

              9.

                In an appropriate place in the proxy statement, please disclose how the perpetuity growth rates used in the calculations presented in this section were
                  determined.

    Response:  In response to the Staff’s comment, the Company has revised the disclosure on pages 79-80 of the Amended Preliminary Proxy Statement.

    Post-hoc analysis and using a predictive enrichment marker strategy to select appropriate patients, page 110

              10.

                We note your disclosure in last paragraph on page 110 that when only the PEM-Positive children are considered, the growth in response to LUM-201 was enhanced and
                  growth due to rhGH treatment was reduced, when compared to all children, and your disclosure in the paragraph after Figure 5 that in the PEM-Positive children, the growth velocity was not statistically different between rhGH and LUM-201.
                  These conclusions appear to be based on a p-value of 0.082. Given the disclosed p-value, please disclose the basis for your statements. If your disclosed p-value does not meet the FDA’s specified threshold for statistical significance for
                  a clinical trial, please revise your disclosure to clarify the p-value that the FDA uses in evaluating the results of a clinical trial and whether the results of the post-hoc analysis would meet such threshold.

    Cooley LLP   380 Interlocken Crescent   Suite 900   Broomfield, CO   80021-8023

        t: (720) 566-4000  f: (720) 566-4099  cooley.com

        U.S. Securities and Exchange Commission
        January 9, 2020

        Page Four

    Response: In response to the Staff’s comment, the Company has revised the disclosure on page 115 of the Amended Preliminary Proxy Statement.

    Prior clinical experience with LUM-201 in PGHD, page 110

              11.

                We note your disclosure that the first study included a study of biologic response. Please disclose if this study was completed and the results of that study as
                  it related to biologic response.

    Response: In response to the Staff’s comment, the Company has revised the disclosure on page 114 of the Amended Preliminary Proxy Statement.

    Expansion of LUM-201 into Additional Endocrine Indications, page 113

              12.

                We note your disclosure on page 104 that you may study the effects of LUM-201 for Turner Syndrome and SGA in a certain subset of patients. Please indicate what
                  portions of the Turner Syndrome and SGA patient populations LUM-201 could address, if approved.

    Response: In response to the Staff’s comment, the Company has revised the disclosure on pages 117-118 of the Amended Preliminary Proxy Statement.

    Ammonett and Lumos Merck Agreements, page 115

              13.

                We note your disclosure regarding the Lumos Merck Agreement. Please disclose all material terms of this agreement, including the aggregate amount of each of the
                  development and sales milestone obligations.

    Response: In response to the Staff’s comment, the Company has revised the disclosure on page 120 of the Amended Preliminary Proxy Statement.

    Unaudited Pro Forma Condensed Combined Financial Information, page 144

              14.

                We note in the third paragraph that you indicate Lumos was determined to be the accounting acquirer based upon the terms of the Merger Agreement and other
                  factors, including Lumos stockholder’s will own approximately 50% of the outstanding common stock of the combined company immediately following the closing of the merger. You also state on page 9 that based on the number of outstanding
                  equity awards and shares of capital stock of each of NewLink and Lumos as of October 15, 2019 holders of NewLink common stock and equity awards are expected to own approximately 52.8% of the fully-diluted common stock of the combined
                  company. Please provide us with your detailed analysis of how you determined that the transaction qualifies as a reverse merger with Lumos being the accounting acquirer. Refer to the guidance in ASC 805-10-55-10 to 55-15.

    Response:  The Company acknowledges the Staff’s comment and advises the Staff that in determining the acquirer for accounting purposes, the Company
      considered ASC 805-10-55-10 through 55-15.

    Cooley LLP   380 Interlocken Crescent   Suite 900   Broomfield, CO   80021-8023

        t: (720) 566-4000  f: (720) 566-4099  cooley.com

      U.S. Securities and Exchange Commission
      January 9, 2020

      Page Five

    Background

    Under the terms of the Merger Agreement, the combined company’s name post consummation of the Merger will be Lumos Pharma, Inc., the legal acquiree’s
      (Lumos) name. The equity of the combined company will reflect the legal acquirer’s (NewLink) capital structure. Following the Merger, Lumos’ CEO, Rick Hawkins, is expected to take over as CEO for the combined company. After the consummation of the
      Merger, the combined company expects to focus its efforts on the development of Lumos’ sole product candidate, LUM-201 (ibutamoren).

    Accounting Acquirer Analysis

    ASC 805-10-55-12 provides that in a business combination effected primarily by exchanging equity interests, the acquirer usually is the entity that
      issues equity interests. However, in some business combinations, commonly called reverse acquisitions, the issuing entity is the acquiree. Subtopic 805-40 provides guidance on accounting for reverse acquisitions. Other pertinent facts and
      circumstances are to be considered in identifying the acquirer in a business combination effected by exchanging equity interests, including the relative voting rights of the combined entity after the business combination taking into account existence
      of options and other convertible securities. Under the terms of the Merger Agreement, the stockholders of Lumos and NewLink will each hold approximately 50% of the outstanding common stock in the surviving corporation immediately following the
      Merger. As provided in the Amended Preliminary Proxy Statement, based on the number of outstanding equity awards and shares of capital stock of each of NewLink and Lumos as of December 31, 2019, immediately following the Effective Time (i) holders of
      NewLink common stock and equity awards are expected to own approximately 51.2% of the fully-diluted common stock of the combined company and (ii) holders of Lumos capital stock and equity awards are expected to own approximately 48.8% of the
      fully-diluted common stock of the combined company. However, and as also provided in the Amended Preliminary Proxy Statement, as of December 31, 2019 and based on the closing price of the NewLink common stock on Nasdaq on December 31, 2019,
      outstanding NewLink options to acquire 848,485 shares of NewLink common stock were out-of-the-money (out of a total of outstanding NewLink options to acquire 3,483,422 shares of NewLink common stock on such date). Accordingly, the split in
      fully-diluted