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United States securities and exchange commission logo
November 23, 2021
Danny Yeung
Director
Prenetics Global Limited
Unit 701-706, K11 Atelier King s Road
728 King s Road, Quarry Bay
Hong Kong
Re: Prenetics Global
Limited
Registration
Statement on Form F-4
Filed November 9,
2021
File No. 333-260928
Dear Mr. Yeung:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form F-4
Cover Page
1. We note your response
to prior comment 1 and re-issue in part. Please revise your
disclosure on the
prospectus cover page to clarify that if Chinese regulatory authorities
disallow your corporate
structure, this would cause the value of your ordinary shares to
significantly decline
or become worthless.
2. We note your response
to prior comment 4 and re-issue in part. The Summary of the
Proxy
Statement/Prospectus should prominently address, but not necessarily be limited
to,
the risks highlighted
on the prospectus cover page.
3. We note your response
to prior comment 5 and re-issue in part. Please clearly disclose
Danny Yeung
FirstName LastNameDanny
Prenetics Global Limited Yeung
Comapany 23,
November NamePrenetics
2021 Global Limited
November
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how you will refer to the holding company, subsidiaries, and VIE, when
providing the
disclosure throughout the document so that it is clear to investors
which entity the
disclosure is referencing and which subsidiaries or entities are
conducting the business
operations. In addition, please ensure that you refrain from using
terms such as "we" or
"our" when describing activities or functions of the VIE.
4. Provide a description of how cash is transferred through your
organization and disclosure
regarding your intentions to distribute earnings or settle amounts
owed under the VIE
agreements. State whether any transfers, dividends, or distributions
have been made to
date.
5. We note your disclosure throughout your filing that Prenetics controls
the VIE
Entity through VIE agreements. However, neither you nor your investors
have an equity
ownership in, direct foreign investment in, or control through such
ownership/investment
of the VIE. As such, when describing the VIE entity, please refrain
from stating or
implying that you control this entity. Your disclosure should be
limited to and clearly
describe the conditions you met for consolidation of the VIE under
U.S. GAAP and
clarify that for accounting purposes you are the primary beneficiary
and your agreements
provide the power to direct the activities of the VIE. In addition,
your disclosure should
note, if true, that the agreements have not been tested in a court of
law.
Summary of the Proxy Statement/Prospectus, page 24
6. We note that the consolidated VIE constituted a material part of your
consolidated
financial statements. For example, the share of loss of a joint
venture for 2020 was $1.1
million for the year ended December 31, 2020 compared to loss before
taxes of $3.9
million. In this regard, please provide in a tabular form a condensed
consolidating
schedule, which depicts the financial position, cash flows and results
of operations for the
parent, the consolidated variable interest entity, and any eliminating
adjustments
separately, as of the same dates and for the same periods for which
audited consolidated
financial statements are required. Please highlight the financial
statement information
related to the variable interest entity and parent, so an investor may
evaluate the nature of
assets held by, and the operations of, entities apart from the
variable interest entity, which
includes the cash held and transferred among entities. We expect that
the activity of the
consolidated variable interest entity will be reflected in a line item
such as investments in
subsidiaries and VIEs in the condensed consolidating schedule. Please
specifically
provide a roll-forward of the balance sheet line item that includes
this consolidated
variable interest entity.
7. We note your response to prior comment 3 and re-issue in part. Please
revise the
Summary of the Proxy Statement/Prospectus to disclose that you will be
a controlled
company. In particular, please:
identify your controlling shareholder;
discuss the controlling shareholder's ability to control matters
requiring shareholder
approval including the election of directors, amendment of
organizational documents
Danny Yeung
FirstName LastNameDanny
Prenetics Global Limited Yeung
Comapany 23,
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2021 Global Limited
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and approval of major corporate transactions;
discuss whether the dual-class shares may have anti-takeover
effects preventing a
change in control transactions that other shareholders might
consider to be in their
best interest; and
disclose the corporate governance exemptions available to a
controlled company and
whether you intend to rely on these exemptions.
8. We note your response to prior comment 11 and re-issue. Please revise
the Summary of
the Proxy Statement/Prospectus to clearly and prominently describe the
corporate
structure and the VIE based in China and what that entails.
Prominently disclose a
diagram of the corporate structure in the Summary, including what the
equity ownership
interests are of each entity. In relation to the VIE, describe all
contracts and arrangements
through which you purport to obtain economic rights and exercise
control that results in
consolidation of the VIE s operations and financial results into
your financial statements.
Identify clearly the entity in which investors are purchasing their
interest and the
entity(ies) in which the company s operations are conducted.
Describe the relevant
contractual agreements between the entities and how this type of
corporate structure may
affect investors and the value of their investment, including how and
why the contractual
arrangements may be less effective than direct ownership and that the
company may incur
substantial costs to enforce the terms of the arrangements. Disclose
the uncertainties
regarding the status of the rights of the Cayman Islands holding
company with respect to
any applicable contractual arrangements with the VIE, its founders and
owners, and the
challenges the company may face enforcing these contractual agreements
due to
uncertainties under Chinese law and jurisdictional limits.
9. We note your response to prior comment 12. Please revise the Summary
of the Proxy
Statement/Prospectus to disclose whether you are required to obtain
any approvals to offer
securities to foreign investors, whether you have received such
approvals and the
consequences to you and your investors if you do not receive or
maintain the approvals,
inadvertently conclude that such approvals are not required, or
applicable laws,
regulations, or interpretations change and you are required to obtain
approval in the
future.
10. We note your response to prior comment 14 and re-issue in part. Please
revise your
disclosure to specifically discuss risks arising from the legal system
in China and Hong
Kong, including risks and uncertainties regarding the enforcement of
laws and that rules
and regulations in China and Hong Kong can change quickly with little
advance
notice; the risk that the Chinese government may intervene or
influence your operations at
any time, or may exert more control over offerings conducted overseas
and/or foreign
investment in China-based or Hong Kong-based issuers, which could
result in a material
change in your operations and/or the value of your ordinary shares.
Acknowledge any
risks that any actions by the Chinese government to exert more
oversight and control over
offerings that are conducted overseas and/or foreign investment in
China-based or Hong
Kong-based issuers could significantly limit or completely hinder your
ability to offer or
Danny Yeung
FirstName LastNameDanny
Prenetics Global Limited Yeung
Comapany 23,
November NamePrenetics
2021 Global Limited
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continue to offer securities to investors and cause the value of such
securities to
significantly decline or be worthless.
11. We note your response to prior comment 15 and re-issue. Prominently
disclose that
trading in your securities may be prohibited under the Holding Foreign
Companies
Accountable Act and your shares could be prohibited from trading if
the PCAOB
determines that it cannot inspect or fully investigate your auditor,
and that as a result an
exchange may determine to delist your securities. If the PCAOB has
been or is currently
unable to inspect your auditor, revise your disclosure to so state.
Please ensure that your
disclosure indicates that the U.S. Senate passed the Accelerating
Holding Foreign
Companies Accountable Act which, if enacted, would require foreign
companies to
comply with PCAOB audits within two consecutive years instead of
three, thus reducing
the time period for triggering the prohibition on trading.
The Artisan Board's Reasons for the Approval of the Business Combination, page
29
12. We note your response to prior comment 19 and re-issue. Please revise
this subsection of
the Summary and page 155 to specifically disclose the material risks
to unaffiliated
investors presented by taking the company public through a merger
rather than an
underwritten offering. These risks could include the absence of due
diligence conducted
by an underwriter that would be subject to liability for any material
misstatements or
omissions in a registration statement.
Risk Factors, page 52
13. We note your response to prior comment 20 and re-issue. Please revise
the Risk Factor
Summary and the Risk Factors section to more prominently display and
discuss the risks
of doing business in Hong Kong.
14. Revise your risk factors to acknowledge that if the PRC government
determines that the
contractual arrangements constituting part of your VIE structure do
not comply with PRC
regulations, or if these regulations change or are interpreted
differently in the future, your
shares may decline in value or become worthless if you are unable to
assert your
contractual control rights over the assets of your PRC subsidiaries.
PubCo's securities may be delisted..., page 75
15. Please revise this risk factor to clearly describe the risk that lack
of inspection by the
PCAOB because of a position taken by an authority in a foreign
jurisdiction could cause
trading in your securities to be prohibited under the Holding Foreign
Companies
Accountable Act and as a result an exchange may determine to delist
your securities.
Background of the Business Combination, page 140
16. We note your response to prior comment 23 and re-issue in part. Please
provide more
specific details regarding the calculations and financial analyses
undertaken by Artisan's
Danny Yeung
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Prenetics Global Limited Yeung
Comapany 23,
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2021 Global Limited
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management and the Artisan Board that were used to determine that a
fully-diluted, pre-
money equity valuation of $1.15 billion for Prenetics was reasonable.
To the extent
relevant, please also disclose the valuation of Prenetics Limited in
February 2021 at the
time of Prenetics's Series D funding round, when an affiliate of the
Sponsor invested in
Prenetics.
The Artisan Board's Reasons for the Approval of the Business Combination, page
150
17. We note your response to prior comment 23 and revised disclosure on
page 153. Please
revise your disclosure to present the enterprise value, 2023E revenue
and revenue
multiple(s) that Artisan's Board reviewed for each comparable company
referenced in
your disclosure.
Certain Prospective Operational and Financial Information, page 156
18. We note your response to comment 29. Please address the following:
In regards to the length of the projections, please disclose the
basis for projections
beyond year three including if the forecasts reflect more than
simple assumptions
about growth rates;
Please disclose how the management and the Board of Artisan
Acquisition Corp.
considered and relied upon these projections;
It is not clear why the reconciliation from Adjusted EBITDA to Net
Profit/Loss
has been removed given the insight it provided on the types of
expenses being
excluded from the determination of Adjusted EBITDA. Please provide
the
reconciliations or advise; and
Please also tell us what consideration you gave to providing a
reconciliation between
Gross Profit and Adjusted Gross Profit.
Prenetics's Business
Overview, page 198
19. We note your revised disclosure indicating that the nucleic acid
amplification test is
provided by Circle HealthPod at POC or at home. Please revise this
statement, as well as
the new graphic that appears on page 200, to reflect your disclosure
elsewhere in the
registration statement indicating that the Circle HealthPod has not
yet launched in the UK
or Europe and that it has not been approved for home use in those
jurisdictions.
Please also revise your statements elsewhere in the registration
statement where you refer
to your preparations for "obtaining EUA" from the FDA to clarify that
there is no
guarantee that the FDA will grant your EUA application.
Our History, page 200
20. We note your response to prior comment 33 and revised disclosure. As
noted in your
response, the identification appears to suggest that potential
investors may consider
investments made by these institutional investors as a factor in
making their investment
Danny Yeung
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Prenetics Global Limited Yeung
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2021 Global Limited
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decisions without knowing the amount of their investment in total or
on a per share basis,
their investment strategies or whether these institutional investors
continue to hold their
shares. Additionally, as these shareholders are not subject to the
reporting requirements of
Section 16, investors will not know when they decide to sell their
shares. Therefore, we
continue to believe the disclosure is inappropriate for the
registration statement and
request that you remove those investors that will not appear in the
combined company's
Principal Shareholders table.
Results of Operations
Other Income and Other Net Losses, page 248
21. In regards to the impairment loss recorded on the joint venture equity
method investment
in Beijing CircleDNA Gene Technology Co., Ltd. in which you wrote down
the carrying
amount of your interest to nil, please expand your disclosures to
better explain the factors
which resulted in this write-down. In this regard we note your
response to comment 50
which indicates that the joint venture carries out genetic testing
services for individuals
which is an integral part of your operating activities. Please help us
better understand the
current level of operations of the joint venture as well as your
ongoing relationship with
the joint venture, including if they are using your products in the
genetic testing they are
performing.
Financial Statements
Note 2(d). Subsidiaries and Non-controlling Interests, page F-8
22. We note your response to comment 47. We note your disclosures
beginning on page F-67
regarding the board of directors approving you to exit your position
in Beijing CircleDNA
Gene Technology Co., Ltd and terminating the contractual agreements
with Shenzhen
Discover Health Technology Co. Ltd. However given that the contractual
agreements are
still in place and were in place during the periods presented, please
provide the disclosures
called for by IFRS 12 regarding your interests in Shenzhen Discover
Health Technology
Co. Ltd. This should include the following:
The interest that non-controlling interests have in this entity
s activities and cash
flows;
The terms of any contractual arrangements that could require you
to provide financial
support to the entity; and
The nature and extent of significant restrictions.
Note 31. Collaboration and Licensing Arrangements, page F-48
23. We note your response to comment 46. To the extent that payments could
become
material under your patent license agreements, we continue to believe
that the material
terms should be disclosed including the financial terms, duration of
the agreement,
and termination provisions. In this regard, we note your response to
comment 52
Danny Yeung
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Prenetics Global Limited Yeung
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2021 Global Limited
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regarding the RT-LAMP technology and expected use of it and also your
disclosures
throughout regarding how a significant portion of the historical
revenue was, and will
continue to be in the near-term, generated from COVID-19 testing
services.
Note 2(a). Basis of Preparation of the Consolidated Financial Statements, page
F-55
24. You disclose that the preference shares will be converted into
ordinary shares of the
Prenetics Global Limited after the completion of the initial public
offering which is
expected to be before March 2022. Please further clarify what initial
public offering you
are referring to.
Note 17. Fair Values of Financial Instruments, page F-65
25. The preference shares liability of $356 million represents
approximately 88% of your total
liabilities at June 30, 2021, of which $300 million is attributable to
the conversion
feature. In this regard, please expand your disclosures to provide
additional insight as to
how the conversion feature was valued pursuant to IFRS 13.93. Your
expanded
disclosures should include a better description of the valuation
technique(s) and inputs
used in the fair value measurement.
General
26. With reference to the guidance contained in Compliance and Disclosure
Interpretations,
Securities Act Forms, Question 101.02, we note that graphic
presentations should not
obscure other prospectus disclosure. Accordingly, please tell us why
you believe it is
appropriate to include nine pages of graphics and accompanying text in
a narrative that
precedes the Summary section. In addition, please refer to the above
referenced
Compliance and Disclosure Interpretation and revise the text so that
it does not focus on
only the most favorable aspects your business or on products that do
not yet exist.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
Danny Yeung
Prenetics Global Limited
November 23, 2021
Page 8
You may contact Nudrat Salik at 202-551-3692 or Mary Mast at
202-551-3613 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Alan Campbell at 202-551-4224 or Laura Crotty at 202-551-7614 with any
other
questions.
Sincerely,
FirstName LastNameDanny Yeung
Division of
Corporation Finance
Comapany NamePrenetics Global Limited
Office of Life
Sciences
November 23, 2021 Page 8
cc: Steve Lin
FirstName LastName