United States securities and exchange commission logo





                               September 24, 2020

       Mark C. McKenna
       President and Chief Executive Officer
       Prometheus Biosciences, Inc.
       9410 Carroll Park Drive
       San Diego, California 92121

                                                        Re: Prometheus
Biosciences, Inc.
                                                            Draft Registration
Statement on Form S-1
                                                            Submitted August
28, 2020
                                                            CIK No.0001718852

       Dear Mr. McKenna:

              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

       Prospectus Summary, page 1

   1.                                                   We note your disclosure
regarding the size of the IBD market in the United States and
                                                        globally. To the extent
such data is available, please indicate on page 1 your estimate of
                                                        the portion of the IBD
population that are relevant to your product candidates, for example
                                                        with respect to PRA023
those predisposed to increased TL1A expression.
   2.                                                   Please include the
indication for each program in the pipeline table on pages 2, 92 and
                                                        111.
   3.                                                   On page 3, please
revise the disclosure to specifically describe what you mean by
                                                           clinically-validated
   and the basis for that claim. Here or in the Business section, include
 Mark C. McKenna
Prometheus Biosciences, Inc.
September 24, 2020
Page 2
         a brief overview of the Phase 2a clinical trial, including indication
tested, enrollment and
         endpoints.
4.       Please briefly clarify how PR600 is distinct from the anti-TNF agents
mentioned on page
         1.
5.       Please revise the references on page 4 and elsewhere to "rapidly
advancing PRA023 into
         the clinic" to avoid any implication that you have the ability to
accelerate FDA
         approvals and commercialization of your product.
6.       On pages 3 and 112, please clarify whether you are collaborating with
Takeda in co-
         development of a drug or producing a companion diagnostic for a drug
Takeda is
         developing.
The Offering, page 8

7.       We note that you intend to affect a split of your common stock prior
to the effectiveness
         of the offering. We remind you that in accordance with SAB Topic 4:C,
you will need to
         revise your financial statements and your disclosures throughout the
filing to give effect to
         the expected stock split. A signed, dated, and unrestricted auditor  s
report must be
         included in the filing prior to effectiveness. See Rule 2-02 of
Regulation S-X.
Use of Proceeds, page 83

8.       Please revise page 83 to disclose how far you expect to proceed in
your trials of PRA023
         for the treatment of ulcerative colitis and Crohn   s disease and in
the development of each
         of your other programs. Also, to the extent material amounts of other
funds are necessary
         to accomplish your specified purposes, state the amounts of such other
funds and the
         sources.
Management   s Discussion and Analysis of Financial Condition and Results of
Operations, page
92

9.       Please further describe the terms of the December 2019 services
agreement with Takeda
         on page 95 and tell us why you believe it is not required to be filed
as an exhibit pursuant
         to Item 601(b)(10) of Regulation S-K.
Business, page 110

10.    On page 114 you state:    For our PRA023 program, we intend to retain
worldwide
       development and commercialization rights.    Please revise to state the
extent to which this
       ability is dependent on technology you in-licensed.
FirstName LastNameMark C. McKenna
11.    Please provide more detail about the oral S1P modulators mentioned on
page 118 and how
Comapany
       theirNamePrometheus    Biosciences,
             mechanism of action            Inc.the standard of care described
here and your
                                  differs from
       product
September        candidates.
            24, 2020  Page 2
FirstName LastName
 Mark C. McKenna
FirstName
PrometheusLastNameMark    C. McKenna
           Biosciences, Inc.
Comapany 24,
September NamePrometheus
              2020           Biosciences, Inc.
September
Page 3    24, 2020 Page 3
FirstName LastName
12.      We note the following statement on page 120:    the potential for TL1A
as a therapeutic
         target in intestinal fibrosis was demonstrated in a study conducted by
Cedars-Sinai
         evaluating the effect of anti-TL1A antibodies in mouse models of IBD.
In these studies,
         treatment with a neutralizing TL1A mAb attenuated disease and reversed
colonic
         fibrosis.    Please provide further details concerning these studies
and the Cedars-Sinai
         study evaluating the effect of anti-TL1A antibodies in mouse models of
IBD, if
         separate, including treatment mechanism, sample size and results.
13.      With respect to the Pfizer study on page 120, please provide the
number of participants
         and further describe the meaning of endoscopic improvement, clinical
remission and the
         substantial decrease in disease biomarkers. Additionally, you state
treatment was
         generally safe and well-tolerated.    While we would not object if you
state that the
         treatment was well-tolerated, please revise to avoid the implication
that products that act
         on this target, like your product candidates, are safe as that
determination is solely within
         the authority of the U.S. Food and Drug Administration and comparable
regulatory
         bodies. Please also describe any serious adverse events reported.
14.      On page 121 you state:    Across multiple patient cohorts, our
companion diagnostic
         captured approximately 30% of the IBD population and showed about a
4-times greater
         probability of identifying patients predisposed to increased TL1A
expression over IBD
         patients predisposed to lowered TL1A expression.    Please explain
what capturing 30% of
         the IBD population means, and what the 4-times greater statement is a
comparison to.
15.      Please clarify which US and non-US patents and patent applications you
own and which
         you license on page 125. Please also state the amount of the cited
"subset" of the US
         patents and patent applications that you are pursuing in other
countries.
16.      Please revise to specify the LDT diagnostic products for which patent
protection expired
         in 2020 as noted on page 126.
17.      On page 130 you state the following with respect to the Falk
Agreement:    In the event of
         such termination, all licenses granted to the terminating party will
cease and be transferred
         to the non-terminating party, and such non-terminating party will have
access to the
         terminating party   s technology, subject to the obligation to pay the
applicable royalties to
         the terminating party.    Please clarify the meaning of access to
technology and the
         contractual duration for such access.
18.      On page 130 please provide the amount of the annual maintenance fee
under the license
         agreement with Alloy Therapeutics, LLC.
19.      We note when describing the royalty term for the collaboration and
license agreements
         described on pages 127 - 130, you note that the term will expire on
the latest to occur of
         several events, including the expiration date of the last valid claim
on a country-by-
         country basis. Please revise to clarify the types of claims this
refers to and when these
         claims are expected to expire.
 Mark C. McKenna
FirstName
PrometheusLastNameMark    C. McKenna
           Biosciences, Inc.
Comapany 24,
September NamePrometheus
              2020           Biosciences, Inc.
September
Page 4    24, 2020 Page 4
FirstName LastName
Executive and Director Compensation, page 166

20.      On page 169, please revise to explain the perquisites or personal
benefits to your named
         executive officers that have or will be provided and the limited
circumstances in which
         they have or will be provided.
4. Balance Sheet Details
Accrued Rebates and Sales Returns, page F-18

21.      We note your disclosure that as a result of the PLI acquisition, the
Company assumed a
         liability of approximately $9.0 million related to state government
rebates for
         pharmaceutical products previously divested by PLI and recorded a
corresponding
         indemnification asset of approximately $7.0 million for the expected
reimbursement to be
         received from Nestl   as rebates are settled by the Company. We
further note your
         statement that the Company plans to dispute a portion of this
liability with state
         governments and if the Company is successful, this could have a
material impact on the
         consolidated statements of operations in the future. Finally, we note
your disclosure in
         your subsequent events footnote on page F-34 that as a result of the
Amendment to the
         PLI Acquisition Agreement, Nestl   agreed to reimburse the Company for
77.5% of a pre-
         acquisition rebate liability of $9.0 million and 50% of any amounts
settled by the
         Company that are above $9.0 million. As such, please confirm whether
the only
         expected exposure and related impact to the Company's consolidated
statements of
         operations in the future is approximately $1 million, otherwise please
clarify the
         accounting guidance the Company is relying on, such that the Company
is expecting a
         material impact on its consolidated statements of operations. Please
update your
         disclosures to clarify accordingly.
       You may contact Ameen Hamady at 202-551-3891 or Daniel Gordon at
202-551-3486 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Margaret Schwartz at 202-551-7153 or Mary Beth Breslin at 202-551-3625
with any
other questions.



                                                              Sincerely,

                                                              Division of
Corporation Finance
                                                              Office of Life
Sciences
cc:      Matthew T. Bush