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United States securities and exchange commission logo
November 4, 2020
William F. Feehery
Chief Executive Officer
Certara, Inc.
100 Overlook Center, Suite 101
Princeton, NJ 08540
Re: Certara, Inc.
Draft Registration
Statement on Form S-1
Submitted October
8, 2020
CIK No. 0001827090
Dear Mr. Feehery:
We have reviewed your draft 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 providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. 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 the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1 Confidentially Submitted on
October 8, 2020
Prospectus Summary
Our Company, page 1
1. Please identify the
analysis that estimated that $1 billion was saved in clinical trial costs
using biosimulation for
a cancer drug and disclose the basis for your belief that you saved
another company $60
million and 24 months.
2. Please disclose the
methodology and assumptions underlying your calculation of your
total addressable
market and its expected growth rate.
3. Please balance your
disclosure of revenue growth in 2018 and 2019 with disclosure of
your net losses for
each of these periods.
William F. Feehery
Certara, Inc.
November 4, 2020
Page 2
Our Sponsor, page 7
4. Please briefly discuss EQT's acquisition of the company in July 2017.
In addition, briefly
describe the stockholders agreement and EQT s director nomination
rights.
The Offering, page 9
5. Please revise to clearly disclose whether the unrestricted and
restricted shares of common
stock to be issued upon conversion of the Class B Units are included
in the common stock
to be outstanding immediately after this offering. Also similarly
clarify disclosures
elsewhere in your filing that refer to, or are based on, the total
shares of common stock
outstanding upon consummation of this offering.
Summary Consolidated Financial Data, page 12
6. Please revise to explain the nature of adjustments to be assumed for
purposes of the
presentation of the As Adjusted balance sheet data.
Risk Factors
Risks Related to Our Business
Our customers may delay or terminate contracts , page 20
7. Please clarify whether your technology-enabled service contracts may
be terminated
without a penalty.
Risks Related to Our Indebtedness
Our indebtedness could materially adversely impact our financial condition ,
page 32
8. To provide context, please disclose the amount of cash used to pay
your debt service
requirements in the last two years and most recent interim period.
Restrictive covenants in the agreements , page 33
9. Please revise your statement that a significant portion of your assets
are pledged as
collateral to secure your credit agreement to state that this
agreement is secured by
substantially all of your assets.
Risks Related to this Offering and Ownership of Our Common Stock
Provisions in our Organizational Documents , page 39
FirstName LastNameWilliam F. Feehery
10. Please briefly describe the limitations on convening special
stockholders meetings and the
Comapany
typesNameCertara,
of provisionsInc.
that may only be amended by an affirmative vote of
two-thirds of your
stockholders.
November 4, 2020 Page 2
FirstName LastName
William F. Feehery
FirstName
Certara, Inc.LastNameWilliam F. Feehery
Comapany 4,
November NameCertara,
2020 Inc.
November
Page 3 4, 2020 Page 3
FirstName LastName
Special Note Regarding Forward-Looking Statements, page 43
11. Please note that reliance upon the safe harbor protections for
forward-looking statements
under the Private Securities Litigation Reform Act is not permitted in
initial public
offerings. See Section 27A of the Securities Act of 1933. Please
either delete any
references to the Private Securities Litigation Reform Act or make
clear that the safe
harbor does not apply to this offering.
Management s Discussion and Analysis of Financial Condition and Results of
Operations, page
54
12. We note your general disclosures of the social and economic impacts
from COVID-19 on
page 18. Please tell us what consideration you gave to providing
expanded information
regarding the specific impacts you have experienced to your operations
and relevant
metrics resulting from the COVID-19 pandemic. Refer to CF Disclosure
Guidance: Topic
No. 9 and 9A for additional guidance.
Key Factors Affecting Our Performance, page 55
13. Please disclose your quarterly bookings and renewal rates for each
period presented. To
the extent there are variances between the rates, revise to address
any known underlying
material trends.
Non-GAAP Measures, page 56
14. In your discussion of Adjusted EBITDA, please revise to include the
most directly
comparable GAAP measure with equal or greater prominence. Refer to
Item
10(e)(1)(i)(A) of Regulation S-K and Question 102.10 of the Compliance
and Disclosure
Interpretation of Non-GAAP Financial Measures.
Impacts of the Initial Public Offering
Equity-Based Compensation Expense, page 58
15. You disclose the amount of unamortized compensation expense in respect
of
performance-vesting awards that will be amortized over the remaining
requisite service
period if and when you determine that vesting is probable. Please also
disclose the
amount of compensation cost to be recognized upon the completion of
the offering related
to those performance-based Class B units that are expected to vest.
For example, we note
from your disclosures on pages 101 and 105 that all of Dr. Feehery s
performance-based
Class B Units are expected to vest upon the completion of this
offering. In addition,
disclose the number of vested shares of common stock and unvested
restricted shares of
common stock into which the vested and unvested Class B Units will be
converted into
upon the adoption of the 2020 Incentive Plan in connection with the
offering.
William F. Feehery
FirstName
Certara, Inc.LastNameWilliam F. Feehery
Comapany 4,
November NameCertara,
2020 Inc.
November
Page 4 4, 2020 Page 4
FirstName LastName
Results of Operations, page 59
16. Please discuss net income (loss) for each period.
Liquidity and Capital Resources
Contractual Obligations and Commercial Commitments, page 72
17. Please revise to include a total for each column of the table that
summarizes your
contractual obligations, consistent with the format of the table
specified in Item 303(a)(5)
of Regulation S-K. In addition, please disclose changes in your
contractual obligations
during the interim period. Refer to Instruction 7 to Item 303(b) of
Regulation S-K.
Critical Accounting Policies and Estimates
Equity-Based Compensation, page 75
18. You indicate that the option-pricing models used to estimate the fair
value of equity
awards uses as inputs the fair value of your common stock. Please
revise to disclose the
methods used to determine the fair value of your common stock, the
nature of the material
assumptions involved, and the extent to which the estimates are
considered highly
complex and subjective. In addition, please explain to us why the fair
value of your
common stock is an input to your pricing model considering that, upon
vesting, the holder
receives a right to a fractional portion of the profits and
distributions of the parent.
Business
Our Growth Strategy, page 84
19. Please define your references to net revenue retention rate and net
revenue repeat rate and
clarify the period to which these measures relate. Please also
disclose the number of
customers for each period presented.
Notes to the Consolidated Financial Statements
Note 13. Segment data, page F-27
20. We note that you operate in one operating segment at the consolidated
level. Please
provide us with your comprehensive analysis to support this conclusion
considering your
disclosure that your CODM evaluates revenues and gross profits based
on product lines
and routes to market. Tell us what consideration was given to
disclosing information
about profit or loss and total assets by product line or routes to
market. Refer to ASC 280-
10-50.
Note 14. Income Taxes, page F-28
21. Please tell us the components of your remaining valuation allowance as
of December 31,
2019. Also explain the nature of the increase in the total valuation
allowance from 2018
to 2019. In this regard, we note the significant decrease in your
foreign net operating loss
carryforwards in 2019.
William F. Feehery
Certara, Inc.
November 4, 2020
Page 5
General
22. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
23. Please disclose the source of the assertions in your prospectus that you
are a global leader
in biosimulation (pages 1, 54 and 79) and that customers using
conventional human trials
would face millions in additional costs and significant launch delays
(pages 6 and 86).
You may contact Melissa Walsh, Staff Accountant, at 202-551-3224 or
Stephen
Krikorian, Accounting Branch Chief, at 202-551-3488 if you have questions
regarding
comments on the financial statements and related matters. Please contact Jeff
Kauten, Staff
Attorney, at 202-551-3447 or Kathleen Krebs, Special Counsel, at 202-551-3350
with any other
questions.
Sincerely,
FirstName LastNameWilliam F. Feehery
Division of
Corporation Finance
Comapany NameCertara, Inc.
Office of
Technology
November 4, 2020 Page 5
cc: William B. Brentani, Esq.
FirstName LastName