SEC Comment Letter for Innoviva, Inc. (INVA) (CIK 0001080014) (INVA) — Oct 25, 2016
Innoviva, Inc. (INVA) (CIK 0001080014)
Date: Oct. 25, 2016 · CIK: 0001080014 · Accession: 0000000000-16-098366
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Letter
Mail Stop 4546 October 25 , 2016 VIA E -mail Eric d’Esparbes Senior Vice President, Finance and Chief Financial Officer Innoviva, Inc. 2000 Sierra Point Parkway, Suite 500 Brisbane, CA 94005
Re: Innoviva , Inc. Form 10 -K for Fiscal Year Ended December 31, 201 5 Filed February 24 , 2016 Form 8-K dated July 28 , 2016 Filed July 28, 2016 File No. 00 0-30319
Dear Mr . d’Esparbes :
We have reviewed your September 22, 2016 response to our comment letter and have the following comments. In some of our comments, we ask you to provide us with information so we may better understand your disclosure.
Please respond to th ese comments within ten business days by providing the requested information or advis e us as soon as possible when you will respond . If you do not believe a comment appl ies to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments , we may have additional comments .
Form 10 -K for the Year Ended December 31, 201 5 Notes to Consolidated Financial Statements 1. Description of Operations and Summary of Significant Accounting Policies Segment Reporting , page 59
1. Please refer to your resp onse to our prior comment 1 and to your response to our prior comment 2 regarding your consideration for providing disaggregated disclosure of capitalized fees by country. The royalties you earn are the result of sales by GSK, your sole customer, and it ap pears that recovery of your c apitalized fees depends on these sales. It is not clear to us why you believe disclosing royalties attributable to major geographic location with disclosure of the basis of that attribution would be misleading. On the contrary, it would appear such disclosure would be material and informative and within the requirements of
Eric d’Esparbes Innoviva , Inc. October 25 , 2016 Page 2
ASC 280 -10-50-40 and 50 -41 and ASC 280-10-55-2. Further, given the nature of capitalized fees and that their recovery is dependent on sales by GSK for which y ou receive royalties, tell us why disclosure of capitalized fees by major geographic location for which the related royalties are received with disclosure as to the basis for such disclosure would not be meaningful and within the requirements of ASC 280 -10-50-40 and 50 -41 and ASC 280-10- 55-2.
Form 8 -K filed July 28, 2016 Exhibit 99.1
2. Please refer to your proposed revised disclosure in response to our prior comment 3. Tell us why use of your non -GAAP measures to assess “ the ability of Innoviva’s assets to generate cash sufficient to pay interest costs and support its indebtedness ” does not contradict your assertion that the measures are not intended to represent cash flow and do not represent a measure of liquidity or cash available for distribution.
You may contact Jim Peklenk , Senior Staff Accountant at (202) 551 -3661 or Jim Rosenberg, Senior Assistant Chief Accountant at (202) 551 -3679 if you have questions regarding the comments . In this regard, do not hesitate to contact me at (202) 551 -3474.
Sincerely,
/s/ Sharon M. Blume
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Mail Stop 4546 October 25 , 2016 VIA E -mail Eric d’Esparbes Senior Vice President, Finance and Chief Financial Officer Innoviva, Inc. 2000 Sierra Point Parkway, Suite 500 Brisbane, CA 94005 Re: Innoviva , Inc. Form 10 -K for Fiscal Year Ended December 31, 201 5 Filed February 24 , 2016 Form 8-K dated July 28 , 2016 Filed July 28, 2016 File No. 00 0-30319 Dear Mr . d’Esparbes : We have reviewed your September 22, 2016 response to our comment letter and have the following comments. In some of our comments, we ask you to provide us with information so we may better understand your disclosure. Please respond to th ese comments within ten business days by providing the requested information or advis e us as soon as possible when you will respond . If you do not believe a comment appl ies to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments , we may have additional comments . Form 10 -K for the Year Ended December 31, 201 5 Notes to Consolidated Financial Statements 1. Description of Operations and Summary of Significant Accounting Policies Segment Reporting , page 59 1. Please refer to your resp onse to our prior comment 1 and to your response to our prior comment 2 regarding your consideration for providing disaggregated disclosure of capitalized fees by country. The royalties you earn are the result of sales by GSK, your sole customer, and it ap pears that recovery of your c apitalized fees depends on these sales. It is not clear to us why you believe disclosing royalties attributable to major geographic location with disclosure of the basis of that attribution would be misleading. On the contrary, it would appear such disclosure would be material and informative and within the requirements of Eric d’Esparbes Innoviva , Inc. October 25 , 2016 Page 2 ASC 280 -10-50-40 and 50 -41 and ASC 280-10-55-2. Further, given the nature of capitalized fees and that their recovery is dependent on sales by GSK for which y ou receive royalties, tell us why disclosure of capitalized fees by major geographic location for which the related royalties are received with disclosure as to the basis for such disclosure would not be meaningful and within the requirements of ASC 280 -10-50-40 and 50 -41 and ASC 280-10- 55-2. Form 8 -K filed July 28, 2016 Exhibit 99.1 2. Please refer to your proposed revised disclosure in response to our prior comment 3. Tell us why use of your non -GAAP measures to assess “ the ability of Innoviva’s assets to generate cash sufficient to pay interest costs and support its indebtedness ” does not contradict your assertion that the measures are not intended to represent cash flow and do not represent a measure of liquidity or cash available for distribution. You may contact Jim Peklenk , Senior Staff Accountant at (202) 551 -3661 or Jim Rosenberg, Senior Assistant Chief Accountant at (202) 551 -3679 if you have questions regarding the comments . In this regard, do not hesitate to contact me at (202) 551 -3474. Sincerely, /s/ Sharon M. Blume Sharon M. Blume Accounting Branch Chief Office of Healthcare and Insurance