CORRESP Filing
CARLSMED, INC.
Date: July 7, 2025 · CIK: 0001794546 · Accession: 0000950170-25-094134
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-288339
Referenced dates: May 21, 2025
Letter
12531 High Bluff Drive Suite 200 San Diego California 92130-3588 TELEPHONE: 858.720.5100 FACSIMILE: 858.720.5125 www.mofo.com
morrison & foerster llp amsterdam, austin, berlin, boston, brussels, denver, hong kong, london, los angeles, miami, new york, palo alto, san diego, san francisco, shanghai, singapore, tokyo, washington, d.c.
July 7, 2025
Via EDGAR FOIA Confidential Treatment Request Under 17 C.F.R §200.83
U.S. Securities and Exchange Commission Division of Corporation Finance 100 F Street, N.E. Washington, DC 20549-3720 Attention: Robert Augustin Katherine Bagley Tayyaba Shafique Terence O’Brien Re: Carlsmed, Inc. Registration Statement on Form S-1 (File No. 333-288339) Ladies and Gentlemen: On behalf of Carlsmed, Inc. (the “Company”), we submit this supplemental letter in response to comment 15 from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) contained in a letter dated May 21, 2025 (the “Initial Comment Letter”), relating to the Company’s Registration Statement on Form S-1, originally confidentially submitted to the Commission on April 23, 2025, resubmitted to the Commission on May 30 , 2025, and filed with the Commission on June 26, 2025 (the “Registration Statement”). Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Registration Statement.
July 7, 2025 Page Two On behalf of the Company, we are respectfully requesting confidential treatment for specified portions of this letter pursuant to Rule 83 promulgated by the Commission, 17 C.F.R. §200.83. This letter is accompanied by such request for confidential treatment because of the commercially sensitive nature of the information discussed in this letter. A redacted version of this letter will be filed with the Commission on EDGAR, omitting the confidential information. The Company respectfully requests that the Commission provide timely notice to the undersigned before it permits any disclosure of the bracketed and highlighted information contained in this letter. Estimated IPO Price Range The Company confirms to the Staff that no price range has yet been provided in the preliminary prospectus included in the Registration Statement. However, the Company has authorized us to inform the Staff supplementally that, based on consultations with the lead underwriters, if the marketing of the proposed initial public offering (“IPO”) were to commence today, the Company’s present view is that the estimated offering range would be $[***] to $[***] per share (the “Preliminary IPO Price Range”) (not taking into an account a reverse stock split that the Company intends to implement prior to the filing of, and that will be reflected in, an amendment to the Registration Statement to be made prior to the commencement of the roadshow for the IPO). The Company advises the Staff that the Preliminary IPO Price Range represents the Company’s current belief of what the indicative price range in the preliminary prospectus may be. Given the volatility in the public trading markets and uncertainty of the timing of the IPO, the final price range to be included in a pre-effective amendment to the Registration Statement remains under discussion between the Company and the lead underwriters and will be subject to then-current market conditions and developments impacting the Company. However, the Company does not believe that the Preliminary IPO Price Range will change significantly. We confirm on behalf of the Company that, prior to circulating copies of the preliminary prospectus in connection with the IPO, the Company will file a pre-effective amendment to the Registration Statement that will include all information, other than information that may be excluded in reliance upon Rule 430A under the Securities Act of 1933, as amended. Such preeffective amendment to the Registration Statement will include a post-split bona fide estimated public offering price range. We further confirm on behalf of the Company that the bona fide offering price range included in the preliminary prospectus will not be greater than $2.00 if the maximum price is $10.00 per share or less, or 20% of the top end of the range, if the maximum price is greater than $10.00 per share, unless otherwise approved by the Staff.
[***] Certain information contained in this letter, marked by brackets, has been omitted and filed separately with the Commission pursuant to 17 C.F.R. §200.83. CONFIDENTIAL TREATMENT REQUESTED BY CARLSMED, INC.
July 7, 2025 Page Three To assist the Staff in its evaluation of the Company’s stock-based compensation, the Company has provided the analysis as set forth below. Summary of Equity Awards in the Preceding 12 Months The Company periodically grants stock options and restricted share unit (“RSU”) awards to certain of its employees, directors and consultants. The following table summarizes by month of grant date the number of shares of common stock underlying stock options or RSUs granted during the previous 12 months, as well as the associated option exercise price per share and the estimated fair value per share of the Company’s common stock on the grant date.
Grant Date Type of Award Number of Shares Underlying Award Option Exercise Price per Share Estimated Fair Value per Share at Grant Date
August 28, 2024 Stock options 281,000 $0.38 $0.75 1, 3
November 13, 2024 Stock options 1,735,660 $0.40 $0.75 2, 3
February 19, 2025 Stock options 4,447,833 $0.78 $0.78
March 5, 2025 Restricted stock units 627,630 N/A $1.06
April 10, 2025 Stock options 399,158 $1.06 $1.06
May 21, 2025 Stock options 66,000 $1.17 $1.17
1. At the time of these option grants, the Board determined the fair value of the Company’s common stock to be $0.38, in part, after taking into account the Company’s most recently available third-party valuation of its common stock, as well as the other objective and subjective criteria identified on pages 97-98 of the Registration Statement. See “March 2024 Valuation and August 2024 Awards” below for more information. 2. At the time of these option grants, the Board determined the fair value of the Company’s common stock to be $0.40, in part, after taking into account the Company’s most recently available third-party valuation of its common stock, as well as the other objective and subjective criteria identified on pages 97-98 of the Registration Statement. See “September 2024 Valuation and November 2024 Awards” below for more information. 3. In connection with the preparation of the Company’s financial statements as of and for the year ended December 31, 2024, and the confidential submission of the Company’s draft registration statement on Form S-1, the Company reassessed the fair value of the underlying common stock used to calculate the related stock-based compensation solely for financial reporting purposes. The fair value reassessment is discussed in more detail below under “August and November Fair Value Reassessment.”
[***] Certain information contained in this letter, marked by brackets, has been omitted and filed separately with the Commission pursuant to 17 C.F.R. §200.83. CONFIDENTIAL TREATMENT REQUESTED BY CARLSMED, INC.
July 7, 2025 Page Four Determination of Fair Value of Common Stock Overview As described in the Registration Statement, as there has been no public market for the Company’s common stock to date, the estimated fair value of its common stock historically has been determined by the board of directors of the Company (the “Board”), with input from management, considering the Company’s most recently available third-party valuations of its common stock as well as the Board’s assessment of additional objective and subjective factors that the Board believed were relevant and which may have changed from the date of the most recent third-party valuation through the date of the equity award. Independent Third-Party Valuations. The Board’s determination of the fair value at the time of each grant above was based, in part, on the results of a third-party valuation of the Company’s common stock. These third-party valuations were prepared in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide: Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the “Practice Guide”), which prescribes several valuation approaches for determining the value of an enterprise, such as the income approach, market approach and asset/cost approach, and various methodologies for allocating the value of an enterprise to its capital structure and specifically its common stock. These include: • Option Pricing Method (“OPM”). The OPM allocates value for each class of equity by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The values of the preferred and common stock are inferred by analyzing these options.
[***] Certain information contained in this letter, marked by brackets, has been omitted and filed separately with the Commission pursuant to 17 C.F.R. §200.83. CONFIDENTIAL TREATMENT REQUESTED BY CARLSMED, INC.
July 7, 2025 Page Five • Probability-Weighted Expected Return Method (“PWERM”). The PWERM is a scenario-based analysis that estimates the value per share based on the probability-weighted present value of expected future investment returns, considering a number of discrete possible outcomes of the business, as well as the economic and control rights of each share class. • Hybrid Method (“Hybrid Method”). The Hybrid Method is a weighted-average method that combines both the OPM and PWERM. Weighting allocations are assigned to the OPM and PWERM methods factoring in possible future liquidity events. Additional Factors. In addition to the most recent independent third-party valuations, the Board considered various objective and subjective factors to determine the fair value of the Company’s common stock as of each award date, including: 1. the Company’s stage of development and business strategy, including the status of research and development efforts of the Company’s products, and the material risks related to the Company’s business and industry; 2. the Company’s results of operations and financial position, including the Company’s levels of available capital resources; 3. the valuation of publicly traded companies in the life sciences and medical device sectors, as well as recently completed mergers and acquisitions of peer companies; 4. the lack of marketability of the Company’s common stock as a private company; 5. the prices of the Company’s convertible preferred stock sold to investors in arm’s-length transactions and the rights, preferences, and privileges of the Company’s convertible preferred stock relative to those of the Company’s common stock; 6. the likelihood of achieving a liquidity event for the holders of the Company’s common stock, such as an initial public offering or a sale of the Company’s company, given prevailing market conditions;
[***] Certain information contained in this letter, marked by brackets, has been omitted and filed separately with the Commission pursuant to 17 C.F.R. §200.83. CONFIDENTIAL TREATMENT REQUESTED BY CARLSMED, INC.
July 7, 2025 Page Six 7. the hiring of key personnel and the experience of management; 8. trends and developments in the Company’s industry; and 9. external market conditions affecting the life sciences and medical device industry sectors. Valuations and Awards Over the Previous 12 Months March 2024 Valuation and August 2024 Awards The Company obtained an independent third-party valuation report of the Company’s common stock as of March 14, 2024 (the “March 2024 Valuation”). The March 2024 Valuation used the OPM method due to the expected term to liquidity and the lack of precise information regarding the timing and likelihood of potential exit events. Under the OPM, the Company applied the subject company transaction method, which calculates the implied enterprise value by accounting for all share class rights and preferences as of the date of the latest financing. In order to determine the value of the Company’s common shares, the Company’s recently closed round of financing was used, where the Company sold shares of Series C Preferred Stock for $1.92 per share on March 12, 2024. The total value implied by this transaction was then applied in the OPM context to determine the value of each class of shares. Within the OPM, the March 2024 Valuation used a risk-free interest rate of [***]%, volatility of [***]% and a weighted time to exit of [***] years. The valuation also applied a [***]% discount for lack of marketability. Based on this analysis, the March 2024 Valuation determined that the equity value of the Company was $[***] million, which resulted in an estimated fair value per share of common stock of $0.38. At the time of the equity grants on August 28, 2024, the Board considered the results of the March 2024 Valuation, as well as the other objective and subjective criteria discussed above, and determined that the fair value of the Company’s common stock was $0.38 per share. For the period from the date of the March 2024 Valuation to August 28, 2024, the Board determined there were no internal or external developments since the date of such valuation that warranted a change in the estimated fair value of the common stock.
[***] Certain information contained in this letter, marked by brackets, has been omitted and filed separately with the Commission pursuant to 17 C.F.R. §200.83. CONFIDENTIAL TREATMENT REQUESTED BY CARLSMED, INC.
July 7, 2025 Page Seven September 2024 Valuation and November 2024 Awards The Company obtained an independent third-party valuation report of the Company’s common stock as of September 30, 2024 (the “September 2024 Valuation”). The September 2024 Valuation used the OPM method due to the expected term to liquidity and the lack of precise information regarding the timing and likelihood of potential exit events. Under the OPM, the company applied the subject company transaction method, which calculates the implied enterprise value by accounting for all share class rights and preferences as of the date of the latest financing. In order to determine the value of the Company’s common shares, the Company’s recently closed round of financing was used, where the Company sold shares of Series C Preferred Stock for $1.92 per share on September 20, 2024. The Company indicated that this transaction remained an indication of value. The valuation also applied a market adjustment to account for changes in key financial metrics between the starting date and the valuation date. The resulting enterprise value was then applied in the OPM context to determine the value of each class of shares. Within the OPM, the September 2024 Valuation used a risk-free interest rate of [***]%, volatility of [***]% and a weighted time to exit of [**] years. The valuation also applied a [***]% discount for lack of marketability. Based on this analysis, the September 2024 Valuation determined that the equity value of the Company was $[***] million, which resulted in an estimated fair value per share of common stock of $0.38. At the time of the equity grants on November 13, 2024, the Board considered the results of the September 2024 Valuation, as well as the other objective and subjective criteria discussed above, and determined that the fair value of the Company’s common stock was $0.40 per share. For the period from the date of the September 2024 Valuation to November 13, 2024, the Board determined there were no internal or external developments since the date of such valuation that warranted a change in the estimated fair value of the comm
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CORRESP
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CORRESP
12531 High Bluff Drive Suite 200 San Diego California 92130-3588 TELEPHONE: 858.720.5100 FACSIMILE: 858.720.5125 www.mofo.com
morrison & foerster llp amsterdam, austin, berlin, boston, brussels, denver, hong kong, london, los angeles, miami, new york, palo alto, san diego, san francisco, shanghai, singapore, tokyo, washington, d.c.
July 7, 2025
Via EDGAR
FOIA Confidential Treatment Request Under 17 C.F.R §200.83
U.S. Securities and Exchange Commission Division of Corporation Finance 100 F Street, N.E. Washington, DC 20549-3720 Attention: Robert Augustin Katherine Bagley Tayyaba Shafique Terence O’Brien Re: Carlsmed, Inc. Registration Statement on Form S-1 (File No. 333-288339) Ladies and Gentlemen: On behalf of Carlsmed, Inc. (the “Company”), we submit this supplemental letter in response to comment 15 from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) contained in a letter dated May 21, 2025 (the “Initial Comment Letter”), relating to the Company’s Registration Statement on Form S-1, originally confidentially submitted to the Commission on April 23, 2025, resubmitted to the Commission on May 30 , 2025, and filed with the Commission on June 26, 2025 (the “Registration Statement”). Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Registration Statement.
July 7, 2025 Page Two On behalf of the Company, we are respectfully requesting confidential treatment for specified portions of this letter pursuant to Rule 83 promulgated by the Commission, 17 C.F.R. §200.83. This letter is accompanied by such request for confidential treatment because of the commercially sensitive nature of the information discussed in this letter. A redacted version of this letter will be filed with the Commission on EDGAR, omitting the confidential information. The Company respectfully requests that the Commission provide timely notice to the undersigned before it permits any disclosure of the bracketed and highlighted information contained in this letter. Estimated IPO Price Range The Company confirms to the Staff that no price range has yet been provided in the preliminary prospectus included in the Registration Statement. However, the Company has authorized us to inform the Staff supplementally that, based on consultations with the lead underwriters, if the marketing of the proposed initial public offering (“IPO”) were to commence today, the Company’s present view is that the estimated offering range would be $[***] to $[***] per share (the “Preliminary IPO Price Range”) (not taking into an account a reverse stock split that the Company intends to implement prior to the filing of, and that will be reflected in, an amendment to the Registration Statement to be made prior to the commencement of the roadshow for the IPO). The Company advises the Staff that the Preliminary IPO Price Range represents the Company’s current belief of what the indicative price range in the preliminary prospectus may be. Given the volatility in the public trading markets and uncertainty of the timing of the IPO, the final price range to be included in a pre-effective amendment to the Registration Statement remains under discussion between the Company and the lead underwriters and will be subject to then-current market conditions and developments impacting the Company. However, the Company does not believe that the Preliminary IPO Price Range will change significantly. We confirm on behalf of the Company that, prior to circulating copies of the preliminary prospectus in connection with the IPO, the Company will file a pre-effective amendment to the Registration Statement that will include all information, other than information that may be excluded in reliance upon Rule 430A under the Securities Act of 1933, as amended. Such preeffective amendment to the Registration Statement will include a post-split bona fide estimated public offering price range. We further confirm on behalf of the Company that the bona fide offering price range included in the preliminary prospectus will not be greater than $2.00 if the maximum price is $10.00 per share or less, or 20% of the top end of the range, if the maximum price is greater than $10.00 per share, unless otherwise approved by the Staff.
[***] Certain information contained in this letter, marked by brackets, has been omitted and filed separately with the Commission pursuant to 17 C.F.R. §200.83. CONFIDENTIAL TREATMENT REQUESTED BY CARLSMED, INC.
July 7, 2025 Page Three To assist the Staff in its evaluation of the Company’s stock-based compensation, the Company has provided the analysis as set forth below. Summary of Equity Awards in the Preceding 12 Months The Company periodically grants stock options and restricted share unit (“RSU”) awards to certain of its employees, directors and consultants. The following table summarizes by month of grant date the number of shares of common stock underlying stock options or RSUs granted during the previous 12 months, as well as the associated option exercise price per share and the estimated fair value per share of the Company’s common stock on the grant date.
Grant Date
Type of Award
Number of Shares Underlying Award
Option Exercise Price per Share
Estimated Fair Value per Share at Grant Date
August 28, 2024
Stock options
281,000
$0.38
$0.75 1, 3
November 13, 2024
Stock options
1,735,660
$0.40
$0.75 2, 3
February 19, 2025
Stock options
4,447,833
$0.78
$0.78
March 5, 2025
Restricted stock units
627,630
N/A
$1.06
April 10, 2025
Stock options
399,158
$1.06
$1.06
May 21, 2025
Stock options
66,000
$1.17
$1.17
1. At the time of these option grants, the Board determined the fair value of the Company’s common stock to be $0.38, in part, after taking into account the Company’s most recently available third-party valuation of its common stock, as well as the other objective and subjective criteria identified on pages 97-98 of the Registration Statement. See “March 2024 Valuation and August 2024 Awards” below for more information. 2. At the time of these option grants, the Board determined the fair value of the Company’s common stock to be $0.40, in part, after taking into account the Company’s most recently available third-party valuation of its common stock, as well as the other objective and subjective criteria identified on pages 97-98 of the Registration Statement. See “September 2024 Valuation and November 2024 Awards” below for more information. 3. In connection with the preparation of the Company’s financial statements as of and for the year ended December 31, 2024, and the confidential submission of the Company’s draft registration statement on Form S-1, the Company reassessed the fair value of the underlying common stock used to calculate the related stock-based compensation solely for financial reporting purposes. The fair value reassessment is discussed in more detail below under “August and November Fair Value Reassessment.”
[***] Certain information contained in this letter, marked by brackets, has been omitted and filed separately with the Commission pursuant to 17 C.F.R. §200.83. CONFIDENTIAL TREATMENT REQUESTED BY CARLSMED, INC.
July 7, 2025 Page Four Determination of Fair Value of Common Stock Overview As described in the Registration Statement, as there has been no public market for the Company’s common stock to date, the estimated fair value of its common stock historically has been determined by the board of directors of the Company (the “Board”), with input from management, considering the Company’s most recently available third-party valuations of its common stock as well as the Board’s assessment of additional objective and subjective factors that the Board believed were relevant and which may have changed from the date of the most recent third-party valuation through the date of the equity award. Independent Third-Party Valuations. The Board’s determination of the fair value at the time of each grant above was based, in part, on the results of a third-party valuation of the Company’s common stock. These third-party valuations were prepared in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide: Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the “Practice Guide”), which prescribes several valuation approaches for determining the value of an enterprise, such as the income approach, market approach and asset/cost approach, and various methodologies for allocating the value of an enterprise to its capital structure and specifically its common stock. These include: • Option Pricing Method (“OPM”). The OPM allocates value for each class of equity by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The values of the preferred and common stock are inferred by analyzing these options.
[***] Certain information contained in this letter, marked by brackets, has been omitted and filed separately with the Commission pursuant to 17 C.F.R. §200.83. CONFIDENTIAL TREATMENT REQUESTED BY CARLSMED, INC.
July 7, 2025 Page Five • Probability-Weighted Expected Return Method (“PWERM”). The PWERM is a scenario-based analysis that estimates the value per share based on the probability-weighted present value of expected future investment returns, considering a number of discrete possible outcomes of the business, as well as the economic and control rights of each share class. • Hybrid Method (“Hybrid Method”). The Hybrid Method is a weighted-average method that combines both the OPM and PWERM. Weighting allocations are assigned to the OPM and PWERM methods factoring in possible future liquidity events. Additional Factors. In addition to the most recent independent third-party valuations, the Board considered various objective and subjective factors to determine the fair value of the Company’s common stock as of each award date, including: 1. the Company’s stage of development and business strategy, including the status of research and development efforts of the Company’s products, and the material risks related to the Company’s business and industry; 2. the Company’s results of operations and financial position, including the Company’s levels of available capital resources; 3. the valuation of publicly traded companies in the life sciences and medical device sectors, as well as recently completed mergers and acquisitions of peer companies; 4. the lack of marketability of the Company’s common stock as a private company; 5. the prices of the Company’s convertible preferred stock sold to investors in arm’s-length transactions and the rights, preferences, and privileges of the Company’s convertible preferred stock relative to those of the Company’s common stock; 6. the likelihood of achieving a liquidity event for the holders of the Company’s common stock, such as an initial public offering or a sale of the Company’s company, given prevailing market conditions;
[***] Certain information contained in this letter, marked by brackets, has been omitted and filed separately with the Commission pursuant to 17 C.F.R. §200.83. CONFIDENTIAL TREATMENT REQUESTED BY CARLSMED, INC.
July 7, 2025 Page Six 7. the hiring of key personnel and the experience of management; 8. trends and developments in the Company’s industry; and 9. external market conditions affecting the life sciences and medical device industry sectors. Valuations and Awards Over the Previous 12 Months March 2024 Valuation and August 2024 Awards The Company obtained an independent third-party valuation report of the Company’s common stock as of March 14, 2024 (the “March 2024 Valuation”). The March 2024 Valuation used the OPM method due to the expected term to liquidity and the lack of precise information regarding the timing and likelihood of potential exit events. Under the OPM, the Company applied the subject company transaction method, which calculates the implied enterprise value by accounting for all share class rights and preferences as of the date of the latest financing. In order to determine the value of the Company’s common shares, the Company’s recently closed round of financing was used, where the Company sold shares of Series C Preferred Stock for $1.92 per share on March 12, 2024. The total value implied by this transaction was then applied in the OPM context to determine the value of each class of shares. Within the OPM, the March 2024 Valuation used a risk-free interest rate of [***]%, volatility of [***]% and a weighted time to exit of [***] years. The valuation also applied a [***]% discount for lack of marketability. Based on this analysis, the March 2024 Valuation determined that the equity value of the Company was $[***] million, which resulted in an estimated fair value per share of common stock of $0.38. At the time of the equity grants on August 28, 2024, the Board considered the results of the March 2024 Valuation, as well as the other objective and subjective criteria discussed above, and determined that the fair value of the Company’s common stock was $0.38 per share. For the period from the date of the March 2024 Valuation to August 28, 2024, the Board determined there were no internal or external developments since the date of such valuation that warranted a change in the estimated fair value of the common stock.
[***] Certain information contained in this letter, marked by brackets, has been omitted and filed separately with the Commission pursuant to 17 C.F.R. §200.83. CONFIDENTIAL TREATMENT REQUESTED BY CARLSMED, INC.
July 7, 2025 Page Seven September 2024 Valuation and November 2024 Awards The Company obtained an independent third-party valuation report of the Company’s common stock as of September 30, 2024 (the “September 2024 Valuation”). The September 2024 Valuation used the OPM method due to the expected term to liquidity and the lack of precise information regarding the timing and likelihood of potential exit events. Under the OPM, the company applied the subject company transaction method, which calculates the implied enterprise value by accounting for all share class rights and preferences as of the date of the latest financing. In order to determine the value of the Company’s common shares, the Company’s recently closed round of financing was used, where the Company sold shares of Series C Preferred Stock for $1.92 per share on September 20, 2024. The Company indicated that this transaction remained an indication of value. The valuation also applied a market adjustment to account for changes in key financial metrics between the starting date and the valuation date. The resulting enterprise value was then applied in the OPM context to determine the value of each class of shares. Within the OPM, the September 2024 Valuation used a risk-free interest rate of [***]%, volatility of [***]% and a weighted time to exit of [**] years. The valuation also applied a [***]% discount for lack of marketability. Based on this analysis, the September 2024 Valuation determined that the equity value of the Company was $[***] million, which resulted in an estimated fair value per share of common stock of $0.38. At the time of the equity grants on November 13, 2024, the Board considered the results of the September 2024 Valuation, as well as the other objective and subjective criteria discussed above, and determined that the fair value of the Company’s common stock was $0.40 per share. For the period from the date of the September 2024 Valuation to November 13, 2024, the Board determined there were no internal or external developments since the date of such valuation that warranted a change in the estimated fair value of the comm