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CORRESP
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CORRESP

Eric Blanchard
T: (212) 479-6565
eblanchard@cooley.com

Via EDGAR

 *FOIA Confidential Treatment Request*

Confidential Treatment Requested by Lexeo Therapeutics, Inc.

In Connection with Registration Statement on Form S-1 (File No. 377-05985)

October 5, 2023

 U.S. Securities and Exchange Commission

 Division of Corporation Finance

 Office of Life Sciences

 100 F Street, N.E.

 Washington, D.C. 20549

Attention:

 Eric Atallah

 Lynn Dicker

Jason Drory

 Tim Buchmiller

Re:
 Lexeo Therapeutics, Inc.

 
 Registration Statement on Form S-1

 
 Filed September 29, 2023

 
 File No. 333-274777

Ladies and Gentlemen:

 On behalf of Lexeo
Therapeutics, Inc. (the “Company”), we are submitting this supplemental letter in further response to comment 14 received from the staff (the “Staff”) of the U.S. Securities and Exchange Commission
(the “Commission”) by letter dated March 3, 2022 with respect to the Company’s Confidential Draft Registration Statement on Form S-1 originally submitted to the Commission on
February 4, 2022, resubmitted to the Commission on May 5, 2022, May 17, 2023, August 16, 2023 and September 18, 2023 and subsequently filed with the Commission on September 29, 2023 (the “Registration
Statement”).

 Due to the commercially sensitive nature of information contained in this letter, this submission is
accompanied by the Company’s request for confidential treatment for selected portions of this letter. The Company has filed a separate letter with the Office of Freedom of Information and Privacy Act Operations in connection with the
confidential treatment request pursuant to Rule 83 of the Commission’s Rules on Information and Requests, 17 C.F.R. § 200.83. For the Staff’s reference, we have enclosed a copy of this letter marked to show the portions redacted from
the version filed via EDGAR and for which the Company is requesting confidential treatment.

 For the convenience of the Staff, we have
recited the prior comment from the Staff in italicized type and have followed the comment with the Company’s response.

 Management’s
Discussion and Analysis of Financial Condition and Results of Operations

 Critical Accounting Policies and Significant Judgements and Estimates

 Determination of Fair Value of Common Stock, page 115

[***] = Certain confidential information contained in this document, marked by bracketed asterisks, has been omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR §200.83.

 Cooley LLP  55 Hudson Drive  New York,
NY  10001

 t: (212) 479-6000  cooley.com

 U.S. Securities and Exchange Commission

 Page Two

6.
 Once you have an estimated offering price or range, please explain to us how you determined the fair value
of the common stock underlying your equity issuances and the reasons for any differences between the recent valuations of your common stock leading up to the initial public offering and the estimated offering price. This information will help
facilitate our review of your accounting for equity issuances. Please discuss with the staff how to submit your response.

The Company’s discussion of its accounting for stock-based compensation is primarily contained within the section of the Registration
Statement entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical accounting policies and significant judgments and estimates—Determination of fair value of common stock,”
appearing on pages 116 through 118 of the Registration Statement.

 The Company submits the below additional information to assist the
Staff in its review of the Company’s position with respect to its determination of the fair value of the shares of common stock underlying its outstanding equity awards and the reasons for the difference between the recent valuations of the
common stock and the estimated offering price for the common stock in its initial public offering (“IPO”).

 Preliminary IPO
Price Range

 The Company advises the Staff that the Company preliminarily estimates a price range of $[***] to $[***] per share of
common stock (the “Preliminary Price Range”) for its IPO, which does not reflect an expected reverse stock split of the Company’s capital stock that the Company expects to effect prior to the filing of a
preliminary prospectus with a bona fide price range. The share and per-share numbers in this letter are presented on a pre-split basis.

The Preliminary Price Range is based in part upon the Company’s financial position and prospects; prospects for the biopharmaceutical
industry; the general condition of the securities markets and the recent market prices of, and the demand for, publicly traded shares of generally comparable companies in the biopharmaceutical industry; as well as feedback from potential investors
following “testing the waters” meetings, which suggested there was investor interest in the Company at a step-up in valuation from the most recent valuation of the Company; and input received from
J.P. Morgan Securities, LLC, Leerink Partners LLC, Stifel, Nicolaus & Company, Incorporated, RBC Capital Markets, LLC and Chardan Capital Markets, LLC, the representatives of the underwriters (the “Representatives”)
for the IPO. The Company notes that, as is typical in initial public offerings, the Preliminary Price Range for the IPO was not derived using a formal determination of fair value, but was determined by discussions among the board of directors of the
Company (the “Board”), senior management of the Company and the Representatives based on their respective assessments of the foregoing factors.

The Company will include a bona fide price range of the common stock in an amendment to the Registration Statement that will precede the
commencement of the Company’s road show, which the Company expects to be a [***]-dollar range (on a post-split basis) within the Preliminary Price Range. The parameters of the bona fide price range will be subject to then-current market
conditions, continuing discussions with the Representatives, and volatility in the securities markets, including, in particular, the volatility experienced in the market by issuers with recent initial public offerings. In any event, the Company
confirms to the Staff that the bona fide price range will comply with Item 501(b)(3) of Regulation S-K and CD&I 134.04.

 [***] = Certain
confidential information contained in this document, marked by bracketed asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to 17 CFR §200.83.

Cooley LLP  55 Hudson Drive  New York, NY  10001

t: (212) 479-6000  cooley.com

 U.S. Securities and Exchange Commission

 Page Three

 Common Stock Valuation Methodologies

As there has been no public market for the Company’s common stock to date, the estimated fair value of the common stock for purposes of
granting equity awards has been determined by the Board, as of the date of each option grant, with input from management, considering the Company’s most recent arm’s-length sales of its convertible
preferred shares, and the most recent third-party valuation 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 grant. The Board considered various objective and subjective factors to determine the estimated fair value of the common stock as of each grant date including:

•

 the prices at which the Company sold shares of convertible preferred stock to outside 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;

•

 lack of an active public market for the common stock;

•

 the Company’s stage of development and business strategy, and material risks related to the Company’s
business;

•

 the Company’s financial condition and the Company’s historical and forecasted performance and operating
results, including the Company’s levels of available capital resources;

•

 the progress of the Company’s research and development efforts and the progress of its clinical trials;

•

 the hiring of key personnel and the experience of management;

•

 the likelihood of achieving a liquidity event, such as an initial public offering, in light of prevailing market
conditions;

•

 external market conditions affecting the biopharmaceutical industry and trends within the life sciences sector;
and

•

 the analysis of initial public offerings and the market performance of similar companies in the biopharmaceutical
industry.

 The third-party valuations of the common stock that the Board considered in making its determinations 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 “AICPA Practice
Aid”), which prescribes several valuation approaches for determining the value of an enterprise, such as the cost, market and income approaches, and various methodologies for allocating the value of an enterprise to its capital
structure and specifically the common stock.

 In accordance with the Practice Aid, the Company considered the following methods for
allocating the enterprise value across its classes of capital shares to determine the estimated fair value of the common stock at each valuation date.

•

 Market Approach (the “Market Approach”). Under this valuation method, the Company
estimates the value based upon the Company’s prior sales of preferred shares to unrelated third parties.

 [***] = Certain
confidential information contained in this document, marked by bracketed asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to 17 CFR §200.83.

Cooley LLP  55 Hudson Drive  New York, NY  10001

t: (212) 479-6000  cooley.com

 U.S. Securities and Exchange Commission

 Page Four

•

 Black-Scholes Option Pricing Method (“OPM”). This valuation method
estimates the value of the common stock using the various inputs in the Black-Scholes option pricing model. The OPM treats the rights of the holders of common stock as equivalent to that of call options on any value of the enterprise above certain
break points of value based upon the liquidation preferences of the holders of the Company’s convertible preferred shares, as well as their rights to participation, and the share prices of the outstanding options. Thus, the value of the common
stock can be determined by estimating the value of its portion of each of these call option rights. Under this method, the common stock has value only if the funds available for distribution to shareholders exceed the value of the liquidation
preference at the time of a liquidity event, such as a merger or sale.

•

 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 each of the possible outcomes considered by the Company.

•

 Hybrid Method. The hybrid method is a weighted-average method that combines both OPM and PWERM. Weighting
allocations are assigned to the OPM and PWERM methods factoring in possible future liquidity events.

 Since
January 1, 2022, the Board has granted options to purchase an aggregate of 13,746,349 common stock under the Company’s 2021 Equity Incentive Plan, comprised of options issued to employees, consultants and
non-employee directors. The Board made the option grants on nine dates during 2022 and 2023, as follows:

 Date of Grant

Number of common
stock Subject to
Options Granted

Exercise Price of
Options Granted
per Ordinary Share

 January 26, 2022

449,060

$1.38

 March 7, 2022

15,000

$1.43

 May 6, 2022

850,786

$1.43

 July 20, 2022

388,542

$1.43

 December 2, 2022

25,250

$1.43

 March 14, 2023

4,922,272

$1.66

 July 23, 2023

1,549,339

$1.04

 August 22, 2023

4,871,569

$1.04

 September 17, 2023

674,531

$1.04

 Determinations of Fair Value of Common Stock on Date of Grant

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, as of the date of each option grant, with input from management, considering the Company’s 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 grant. The third-party valuations of the
Company’s common stock that the Board considered in making its determinations were prepared in accordance with the AICPA Practice Aid.

 [***] = Certain
confidential information contained in this document, marked by bracketed asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to 17 CFR §200.83.

Cooley LLP  55 Hudson Drive  New York, NY  10001

t: (212) 479-6000  cooley.com

 U.S. Securities and Exchange Commission

 Page Five

 In order for the Board to determine the estimated fair value of the Company’s common
stock, the Hybrid Method was utilized for the independent third-party valuations of the common stock as of December 17, 2021 (the “December 17, 2021 Valuation”), as of February 15,
2022 (the “February 15, 2022 Valuation”), as of February 14, 2023 (the “February 14, 2023 Valuation”), and as of June 23,
2023 (the “June 2023 Valuation”), each as discussed below, as the Company had some visibility into the timing of a potential IPO. Equity value for each liquidity event scenario utilized in each of the valuations was weighted
based on a probability of each liquidity event’s occurrence. The Hybrid Method is commonly used in these situations and is consistent with guidance from the AICPA Practice Aid. In each of the IPO scenarios discussed below, the Company assumed
that all outstanding shares of the Company’s convertible preferred shares will convert to common stock and all outstanding in the money options, and warrants will be exercised. Given the common stock represent a
non-marketable equity interest in a private enterprise, an adjustment to the preliminary value estimates had to be made to account for the lack of liquidity that a shareholder experiences. This adjustment is
commonly referred to as a discount for lack of marketability (“DLOM”).

 At each grant date, the Board evaluated
any recent events and their potential impact on the estimated fair value per share. For grants of equity awards made on dates for which there was no contemporaneous independent third-party valuation, the Board determined the estimated fair value of
the common stock on the date of grant taking into consideration the immediately preceding valuation report as well as other pertinent information available to it at the time of the grant.

December 17, 2021 Valuation (Used to Determine Fair Value of Common Stock on Date of Grant for Options Granted on January 26, 2022):

 The Company completed its Series B preferred stock financing on August 10, 2021 (the “Series B
Financing”) and held an organizational meeting for the IPO on [***]. In connection with these events, the Company obtained the December 17, 2021 Valuation. The December 17, 2021 Valuation utilized a Hybrid Method, in which
both a staying private scenario and a going public scenario were considered, resulting in a fair value of $[***] per share, as described below.

For the staying private scenario, the December 17, 2021 Valuation used the Market Approach, utilizing the subject company method (the
“Subject Company Metho