SEC Comment Letter for VERTEX PHARMACEUTICALS (VRTX) — Dec 5, 2016
VERTEX PHARMACEUTICALS INC / MA (VRTX) (CIK 0000875320)
Date: Dec. 5, 2016 · CIK: 0000875320 · Accession: 0000000000-16-103513
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-19319
Letter
Mail Stop 4546 Dece mber 5, 2016 VIA E -mail Dr. Jeffrey M. Leiden , M.D., Ph.D. Chairman of the Board, Presid ent and Chief Executive Officer Vertex Pharmaceuticals Incorporated 50 Northern Avenue , Boston, Massachusetts 02210
Re: Vertex Pharmaceuticals Incorporated Form 10-K for Fis cal Year Ended December 31, 2015 Filed February 16 , 2016 File No. 000-19319
Dear Dr. Leiden :
We have reviewed your October 19 , 2016 response to our comment letter and have the following comment s. In some of our comment s, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to these comment s within ten business days by providing th e requ ested information or advise us as soon as possible when you will respond . If you do not believe a comment applies to your facts and circumstances, please tell us why in your response.
After reviewing your response to the se comment s, we may have additional comments .
Notes to Consolidated Financial Statements B. Collaborative Arrangements Variable Interest Entities (VIE) Parion Sciences, Inc., page F -19
1. We note from your response to comment 1 within your August 12 , 2016 letter that your upfront payment and the related fair value of the contingent consideration provided significantly more than half of the financial support to Parion based on an analysis of the fair values of the interests in the legal entity. We further note your response to comment 6 of the same letter that de minimis value was attributed to Parion’s assets other than the Licensed Assets. Please explain to us your analysis under ASC 810 -10-25-55, supporting your conclusion that the fair value of the specified assets is more than half of the total fair value of Parion’s assets after the execution of the Strategic Collaboration and License Agreement. Include within your response an explanation as to whether the fair value of
Dr. Jeffrey M. Leiden Vertex Pharmaceuticals Incorporated December 5, 2016 Page 2
Parion’s assets include both the fair value of the Licensed Assets (since the Licensed Assets remain in Parion ) and the fair value of the consideration (upfront and contingent) received by Parion for the Licensed Assets and t he basis for your conclusion.
2. We note your response to comment 5 of our letter date d September 30, 2016 regarding the calculation of goodwill upon consolidation of Parion. Please provide us with a quantitative breakdown of your calculation of the goodwill recognized upon consolidation of Parion in the following format:
Item ASC Reference Amount Fair value of consideration transferred ASC 805 -30-30-1(a)(1) Plus: Fair value of noncontrolling interest ASC 805 -30-30-1(a)(2) Less: Identifiable assets of Parion measured in accordance with Topic 805 ASC 805 -30-30-1(b) Plus: Identifiable liabilities of Parion measured in accordance with Topic 805 ASC 805 -30-30-1(b) Equals: Goodwill recognized at the acquisition date ASC 805 -30-30-1
You may contact Bonnie Baynes, Staff Accountant, at (202) 551 -4924 if you have any questions regarding the comment s. In this regard, do not hesitate to contact me at (202) 551 - 3679 .
Sincerely,
/s/ Jim B. Rosenberg
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Mail Stop 4546 Dece mber 5, 2016 VIA E -mail Dr. Jeffrey M. Leiden , M.D., Ph.D. Chairman of the Board, Presid ent and Chief Executive Officer Vertex Pharmaceuticals Incorporated 50 Northern Avenue , Boston, Massachusetts 02210 Re: Vertex Pharmaceuticals Incorporated Form 10-K for Fis cal Year Ended December 31, 2015 Filed February 16 , 2016 File No. 000-19319 Dear Dr. Leiden : We have reviewed your October 19 , 2016 response to our comment letter and have the following comment s. In some of our comment s, we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comment s within ten business days by providing th e requ ested information or advise us as soon as possible when you will respond . If you do not believe a comment applies to your facts and circumstances, please tell us why in your response. After reviewing your response to the se comment s, we may have additional comments . Notes to Consolidated Financial Statements B. Collaborative Arrangements Variable Interest Entities (VIE) Parion Sciences, Inc., page F -19 1. We note from your response to comment 1 within your August 12 , 2016 letter that your upfront payment and the related fair value of the contingent consideration provided significantly more than half of the financial support to Parion based on an analysis of the fair values of the interests in the legal entity. We further note your response to comment 6 of the same letter that de minimis value was attributed to Parion’s assets other than the Licensed Assets. Please explain to us your analysis under ASC 810 -10-25-55, supporting your conclusion that the fair value of the specified assets is more than half of the total fair value of Parion’s assets after the execution of the Strategic Collaboration and License Agreement. Include within your response an explanation as to whether the fair value of Dr. Jeffrey M. Leiden Vertex Pharmaceuticals Incorporated December 5, 2016 Page 2 Parion’s assets include both the fair value of the Licensed Assets (since the Licensed Assets remain in Parion ) and the fair value of the consideration (upfront and contingent) received by Parion for the Licensed Assets and t he basis for your conclusion. 2. We note your response to comment 5 of our letter date d September 30, 2016 regarding the calculation of goodwill upon consolidation of Parion. Please provide us with a quantitative breakdown of your calculation of the goodwill recognized upon consolidation of Parion in the following format: Item ASC Reference Amount Fair value of consideration transferred ASC 805 -30-30-1(a)(1) Plus: Fair value of noncontrolling interest ASC 805 -30-30-1(a)(2) Less: Identifiable assets of Parion measured in accordance with Topic 805 ASC 805 -30-30-1(b) Plus: Identifiable liabilities of Parion measured in accordance with Topic 805 ASC 805 -30-30-1(b) Equals: Goodwill recognized at the acquisition date ASC 805 -30-30-1 You may contact Bonnie Baynes, Staff Accountant, at (202) 551 -4924 if you have any questions regarding the comment s. In this regard, do not hesitate to contact me at (202) 551 - 3679 . Sincerely, /s/ Jim B. Rosenberg Jim B. Rosenberg Senior Assistant Chief Accountant Office of Healthcare and Insurance