SecProbe.io

CORRESP
1
filename1.htm

CORRESP

 October 26, 2023

 EDGAR
CORRESPONDENCE

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 Office of Life Sciences

100 F Street, N.E.

 Washington, D.C. 20549

Attn: Laura Crotty and Dillon Hagius

Re:
 Aeglea BioTherapeutics, Inc.

 
 Registration Statement on Form S-1

 
 Filed on August 7, 2023

 
 File No. 333-273769

Ladies and Gentlemen:

 On behalf of Aeglea
BioTherapeutics, Inc. (the “Company” or “Aeglea”), this letter responds to the comments of the staff of the Securities and Exchange Commission Division of Corporation Finance (the “Staff”) contained
in your letter, dated October 20, 2023 (the “Comment Letter”), regarding the above-referenced Registration Statement on Form S-1, which was originally filed on Form S-3 on August 7, 2023 (the “Registration Statement”). The Staff’s comments are set forth below, followed by the Company’s responses. For ease of reference, the heading and numbered
paragraphs below correspond to the heading and numbered comments in the Comment Letter. The Company’s responses are set forth in ordinary type beneath the Staff comment, which is set out in bold type.

General

1.
 We note the representation in Section 2.4 of the Agreement and Plan of Merger, filed on June 23,
2023 as exhibit 2.1 to Aeglea’s Form 8-K, that Spyre’s holders were required to consent to the merger. We further note your Form S-1 seeks to registers the
resale of securities issued and issuable to Spyre’s security holders as consideration for the merger. Please revise to identify all former affiliates of Spyre reselling pursuant to this Form S-1 as
underwriters and fix a selling price for the duration of their offering. See Securities Act Rule 145(c).

 We note that the foregoing
comment follows prior comments issued by the Staff on August 28, 2023 and September 29, 2023 (reissuing Comment No. 1 from the August 28, 2023 letter), both of which are predicated on the question of whether the Company was a
shell company and thus ineligible to use Form S-3. Having elected to convert the Registration Statement to Form S-1 following the September 29, 2023 comment letter
and subsequent discussion with the Staff, the Company is now faced with a request to identify affiliated selling stockholders as presumptive

 Abu Dhabi • Beijing
• Brussels • Century City • Dallas • Denver • Dubai • Frankfurt • Hong Kong • Houston • London • Los Angeles

Munich • New York • Orange County • Palo Alto • Paris • San Francisco • Singapore • Washington, D.C.

 U.S. Securities and Exchange Commission

October 26, 2023

 underwriters under Securities Act Rule 145(c). As noted in the Company’s response to the
September 29, 2023 comment letter, the Company reaffirms its view that at no time has it been a shell company. In light of the Staff’s most recent comments, the Company would like to take this opportunity to provide its analysis of the
shell company question, both under the existing framework set forth in Rule 4051 under the Securities Act (as elucidated by Release No. 33-8407 (the
“Proposing Release”) and No. 33-8587 (the “Adopting Release”)), as well as the “totality of the transactions” standard set forth in the Staff’s
September 29, 2023 comment letter, as further articulated in subsequent calls with the Staff.

 Current Legal Standard

The test for what constitutes a “shell company” is set forth in Rule 405 under the Securities Act, which defines a shell company as a registrant that
has both:

(i)
 no or nominal operations; and

(2)
 either: (i) no or nominal assets; or (ii) assets consisting solely of cash and cash equivalents; or
(iii) assets consisting of any amount of cash and cash equivalents and nominal other assets.

 As described below, the Company
believes that it has, at all times since its initial public offering in 2016, maintained both substantive operations and assets and thus cannot be properly characterized as a shell company at any point in time.

No or nominal operations

 Prior to the acquisition
of Spyre in June 2023, the Company operated as a clinical-stage biotechnology company focused on human enzyme therapeutics for the treatment of rare metabolic diseases. As a result of an interim review of clinical data in April 2023 for the
Company’s homocystinuria program, the Company observed mixed results at the doses and treatment durations tested. The Company believed that while this drug candidate could potentially show a clinically meaningful benefit at higher doses and/or
longer treatment durations, the Company was not in a position to continue to study the drug in this indication. Accordingly, the Company began a process of exploring strategic alternatives to preserve and create value for its stockholders. This
process included considering in-licenses, acquisitions, business combinations and/or the sale of clinical programs.

1
 Rule 12b-2 under the Exchange Act sets forth the same test for shell
company status. For convenience, we have referred in this letter to the shell company test under Rule 405, although the analysis applies as well to Rule 12b-2 under the Exchange Act.

 2

 U.S. Securities and Exchange Commission

October 26, 2023

 At the same time the Company was exploring strategic alternatives, the Company continued to invest resources
in its clinical programs to preserve the value of the assets in any future disposition. These activities included the following for both the homocystinuria and arginase 1 deficiency programs (which was being developed in collaboration with a
European licensing partner): maintaining manufacturing rights and capabilities, the orderly wind down of existing clinical trials to allow another party to continue research and development, the collection and storage of patient data, the
documentation of technical aspects of the legacy assets, and the retention of key staff and consultants to conduct these activities. These activities were conducted before and continued after the acquisition of Spyre on June 22, 2023. At the
time of the Spyre acquisition, the Company had nine employees. Following the Spyre acquisition, this number increased to 14 employees (as of June 30, 2023). While perhaps not dispositive, we would note that the Adopting Release (addressing the
rationale of why shell companies should not need Form S-8 eligibility) states that shell companies “do not operate businesses and, hence, rarely have employees.” In contrast, the Company had an
annual payroll of approximately $2.3 million at the time of the Spyre acquisition.

 For the three and six months ended June 30, 2023, the
Company’s operating expenses associated with these operating activities (i.e., research and development expenses, plus general and administrative expenses) totaled approximately $29.4 million and $48.5 million, respectively.2 In light of these operating activities and corresponding expenses, we would respectfully submit that the Company’s operations at all times through the acquisition of Spyre were substantial and
anything but “nominal”, as required under Rule 405 in order for the Company to be deemed a shell company. Since the acquisition of Spyre, the Company has further ramped up its operations and had 18 employees as of September 30, 2023.

 Before considering the second prong of the shell company test (i.e., no/nominal assets), we would note that the prongs are conjunctive, such that both
prongs must be met in order for a company to be deemed a shell company. Accordingly, we would respectfully submit that solely on the basis of its operations through the closing of the Spyre acquisition (and since that time), the Company should not
be deemed to be a shell company. However, we would submit that the Company also fails the asset test for shell company status, as described below.

No or nominal assets

 As of March 31, 2023
and June 30, 2023, the Company had total assets (excluding cash, cash equivalents, marketable securities and restricted cash) of approximately $12.7 million and $6.9 million, respectively. While the Adopting Release declined to adopt
a bright-line test for what constitutes “nominal” assets, the foregoing asset values are not “nominal.”

2
 In the period ended June 30, 2023, the Company recorded a separate IPR&D expense of approximately
$130 million relating to the Spyre acquisition, which was accounted for as an asset purchase under GAAP.

 3

 U.S. Securities and Exchange Commission

October 26, 2023

 Moreover, we would note that the book value of the Company’s assets reflected on the balance sheet do
not reflect the fair value of the Company’s drug development programs, which had been expensed as incurred as in-process research and development in accordance with GAAP.3 Under generally accepted accounting principles, expenses incurred in the development of pre-revenue assets are expensed as incurred (as reflected in the
Company’s accumulated deficit of $661 million as of June 30, 2023). Accordingly, the fair value of the Company’s non-cash assets was substantially higher than the $6.9 million
reflected on the Company’s June 30, 2023 balance sheet. This is reflected by the Company’s divestiture in July 2023 of one of the Company’s two clinical-stage legacy assets for an upfront payment of $15 million and up to
$100 million of contingent consideration.

 Taking into account this post-closing sale, it is clear that the Company had more than nominal assets at
closing, both based on book value and fair value.

 Other Considerations

In discussing the traits of shell companies and the need for regulation of shell companies, the Proposing Release identified a number of other factors that are
often present in entities that are deemed to be shell companies. We have copied these below with an analysis of how such factors relate to the Company and its business combination with Spyre:

 Shell Company Trait

 Analysis

No or nominal assets and operations

 As discussed above, Aeglea had substantial operations and assets at all times through (and after) the Spyre acquisition. Since inception, the
Company has incurred a cumulative deficit of $661 million, including approximately $20.1 million in operational expenses in the three months ended June 30, 2023 (i.e., the period in which the business combination with Spyre was
completed). At the time of consummation of the Spyre acquisition, the Company had nine full-time employees and an annual payroll of approximately $2.3 million.

Also, as noted above, Aeglea had non-cash assets with a book value of $6.9 million as of June 30, 2023 and
additional assets with a greater value on a fair-value basis (as reflected in the subsequent sale of one such asset for $15 million of upfront consideration, with a potential $100 million of contingent consideration).

3
 We acknowledge that the Adopting Release contemplates measuring assets based on GAAP (i.e., book value and not
fair value). However, the Staff’s September 29, 2023 comment letter raises considerations that we believe to be outside of the parameters of Rule 405. Accordingly, we thought it would be helpful to provide a fuller picture of other non-cash assets held by the Company that are not recorded on the balance sheet for GAAP purposes.

 4

 U.S. Securities and Exchange Commission

October 26, 2023

Small trading market

 Aeglea has traded on Nasdaq since 2016 (with substantive trading volume during that time), while shell companies typically trade on the OTC
market. We would note that Nasdaq does not permit the initial listing or continued listing of shell companies (other than companies that initially list as a SPAC, which does not apply in the Company’s case).

Shell company promoters issue large amounts of securities to themselves or designated nominees

 Aeglea has operated as a Nasdaq-listed biotechnology company since 2016. Accordingly, there are no “promoters” for Aeglea. While
Rule 405 has a broad definition of what constitutes a “promoter,” the definition focuses on persons (and their affiliates) who are engaged in the founding or organizing of a company. In the case of Aeglea, it was founded as a
limited liability company in 2013 and converted to the current corporate entity in 2015.

From the time of its IPO through the Spyre acquisition, there have been no issuances to directors, officers or employees outside of stockholder-approved equity
compensation plans (or inducement grants, as permitted by Nasdaq rules) since 2016.4 At the time of the Spyre acquisition, new equity awards were approved for the directors and officers, but such
awards are subject to stockholder approval at a meeting expected to be held in November 2023.

 The shell company acquires a private business that the promoters claim has high growth potential

Aeglea does believe that the Spyre assets have high growth potential. However, as noted above, there are no “promoters” with respect to Aeglea.

Inadequate information is available to investors regarding the post-transaction company

 Following the acquisition of Spyre, Aeglea has provided information regarding Spyre’s business, operations and risks. This information
was provided in Aeglea’s Current Report on Form 8-K filed on June 23, 2023, Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, preliminary
proxy statement on Schedule 14-A (filed August 8, 2023) and in the Registration Statement.

We also note that Aeglea is deemed to be the accounting acquirer of Spyre for GAAP purposes. Accordingly, Aeglea’s historical financial statements will
continue to be the financial statements for the combined business on a going-forward basis. With respect to Spyre’s historical financial statements, the Office of Chief Accountant granted a request for relief from the requirement to provide
historical financial statements and instead accepted an audited Statement of Assets Acquired and Liabilities Assumed, prepared on the basis of the purchase price of the Spyre assets and not its historical carrying value.

4
 We note that the Staff’s comment refers to former affiliates of Spyre (not Aeglea), while the focus
of the Staff’s inquiry in the prior two comment letters related to the assets and operations of Aeglea, as the potential shell entity. With respect to shares issued to the selling stockholders listed in the Registration Statement who were also
former affiliates of Spyre, those selling stockholders invested an aggregate sum of approximately $75 million in the concurrent June 2023 PIPE offering consummated by Aeglea. Accordingly, we would submit that such a significant investment
(which has now been subject to market risk for approximately four months) does not align with the market abuses that the shell rules seek to deter, nor does it align with the view that such parties are acting as underwriters.

 5

 U.S. Securities and Exchange Commission

October 26, 2023

Promoters “pump” up the price of the stock to investors through unduly positive press releases on the company and its prospects, exaggerated tout sheets, or fraudulent messages on the Internet

 As noted above, there are no “promoters” in the context of the Spyre acquisition, nor has the Staff alleged any inappropriate
messages intended to “pump” up the stock price. The Company believes that its disclosures have, at all times, been measured and appropriate. While the stock price has reacted positively to the Spyre acquisition, we note that this is also
in the context of a $210 million PIPE that was completed simultaneously with the business combination. We do not believe that this type of catalyst (i.e., a substantive acquisition, coupled with a large financing supported by many well-regarded
investment funds) is the type of promotional hype that the shell rules were intended to address.

Promoters “dump” their stock in the company by selling it at the artificially high prices their promotional activities have created, halt those activities and move on, allowing the price of the stock to sink in value in
th