SEC Comment Letter for vTv Therapeutics Inc. (VTVT) (CIK 0001641489) (VTVT) — Jun 11, 2015
vTv Therapeutics Inc. (VTVT) (CIK 0001641489)
Date: June 11, 2015 · CIK: 0001641489 · Accession: 0000000000-15-031158
AI Filing Summary & Sentiment
Reasoning
Letter
June 10, 2015 Stephen L. Holcombe President and Chief Executive Officer vTv Therapeutics Inc. 4170 Mendenhall Oaks Pkwy High Point, NC 27265
Re: vTv Therapeutics Inc. Draft Registration Statement on Form S -1 Submitted May 14, 2015 CIK No. 0001641489
Dear Mr. Holcombe:
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 registra tion statement or filed registration statement, we may have additional comments
General
1. 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 o n 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.
2. Please provide us with copies of any graphics, maps, photographs, and related captions or other ar twork including logos that you intend to use in the prospectus.
Stephen L. Holcombe vTv Therapeutics Inc. June 10, 2015 Page 2
Prospectus Summary, page 1
The Reorganization Transactions, page 4
3. Please discuss the reasons for the structuring of the reorganization transaction.
4. You use the terms economic right, economic interest and economic ownership. Please revise to describe what these terms mean. For example, in describing the economic ownership held by the Registrant and vTv Therapeutics Holdings LLC in vTv Therapeutics LLC, please clarify what economic ow nership is and explain whether or not both owners will share in the economics on a pro rata basis based upon their economic ownership percentage. If any material differences in rights exist, please disclose them as well.
5. In the diagram of your corporate structure, you show operating subsidiaries below vTv Therapeutics LLC. Please revise to present each operating subsidiary separately and describe the nature and form of their voting and economic ownership. Please also revise your disclosures to clarify h ow vTv Therapeutics LLC obtained each of these operating subsidiaries and their relationship, if any, to the assets you state will be contributed to vTv Therapeutics LLC by vTvx Holdings I and II.
Summary Historical and Pro Forma Financial Data, page 12
6. Please tell us the guidance you are relying upon in presenting pro forma net loss per share information for the year ended December 31, 2013 or remove it from the filing. If you intend to present a pro forma net loss per share amount under the historical column for the year ended December 31, 2014, please revise your disclosures to clarify why it is being presented, how it was computed and how it differs from the amount shown in the pro forma column.
7. Please revise to also include your reorganization pro f orma information.
Risk Factors, page 13
Risks Relating to Our Dependence on Third Parties, page 29
We do not have multiple sources of supply . . ., page 31
8. Please clarify whether you have any material agreements with your suppliers. If so, please file them as exhibits.
Stephen L. Holcombe vTv Therapeutics Inc. June 10, 2015 Page 3
Use of Proceeds, page 52
9. We note the disclosure regarding the intended use of proceeds. Please provide the approximate amount intended to be used for each such purpose, as required by Item 504 of Regulation S -K.
10. We note the disclosure in the last two paragraphs of this section and in the third risk factor on page 45 that the use of proceeds could change in the future as your plans and business conditions evolve and that you retain broad discretion in the application of the net proceeds from this offering. The company may reserve the right to change the use of proceeds, provided that such reservation is due to certain contingencies that are discussed specifically and the alternatives to such use in that event are indicated.
Unaudited Pro Forma Condensed Combined Consolidated Statements of Operations, page 59
11. You disclose your former subsidiary HPCTC, which provided clinical trial services, was sold to a former officer and director on December 30, 2014. Please revise your pro forma financial statements to give effect to the disposal of HPCTC in a separate column preceding the reorganization adjustments column or explain to us why it is not required. Please refer to Rules 11 -01(a)(4) and 11 -01(b) of Regulation S -X.
12. Please rev ise Notes (b) on pages 60 and 62 to disclose how the amount of each pro forma adjustment was determined.
13. Please present reorganization pro forma earnings (loss) per share amounts. Please also revise Note (c) on page 60 to disclose how the reorganization pro forma and pro forma earnings (loss) per share amounts were computed and disclose any securities not included in each computation for anti -dilutive reasons. In addition, please disclose the number of offering shares included in the denominator used for computing pro forma earnings (loss) per share and explain your basis for including them. Please also disclose the number of offering shares not included and explain why they were not.
Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet, pa ge 61
14. It does not appear you have given pro forma effect to all of the reorganization transactions disclosed on page 4. It appears after the reorganization transactions that substantially all of vTvx Holdings I and II’s assets will have been contributed to vTv Therapeutics LLC. In addition, it appears the Registrant will then hold a voting managing member interest in vTv Therapeutics LLC with no economic interest. Please tell us your basis for presenting the members’ equity o f vTvx Holdings I in the reorganization pro forma column, rather than the equity of the Registrant. Please also explain why no noncontrolling interest in vTv Therapeutics LLC has been reflected. Please also address the related impact this would have on t he reorganization pro forma column presented in your pro forma statement of operations.
Stephen L. Holcombe vTv Therapeutics Inc. June 10, 2015 Page 4
15. Please tell us whether or not the Registrant would meet the requirements for consolidating vTv Therapeutics LLC after the reorganization transactions but before the offering adjustments and provide us with the analysis you performed in reaching this conclusion, including your consideration of the applicability of the variable interest entity model in ASC 810. Please provide us with a similar consolidation analysis afte r the offering adjustments.
16. Please disclose your proposed accounting for the acquisition of vTv Therapeutics LLC Units with the offering proceeds and explain to us the basis for your accounting treatment.
Management’s Discussion and Analysis of Financial Condition and Results of Operations , page 65
Recently Issued Accounting Pronouncements Not Yet Adopted, page 75
17. You are in the process of assessing the impact of the adoption of ASU No. 2015 -02 on your financial statements. Please update your disclos ures to address the expected impact. Please also disclose here and elsewhere in the filing any characteristics of the Registrant’s structure that could potentially impact your consolidation of vTv Therapeutics LLC and/or other entities upon the adoption o f this ASU.
License Agreements, page 98
18. Please file the license agreement with Calithera as an exhibit.
19. Consider discussing the letter agreement with a former officer, as referenced in footnote three to the financial statements and file the agreement as an exhibit.
Management, page 109
20. Please disclose time period during which Mr. Kindler has served in each employment listed. In addition, please discuss the specific experience, qualifications, attributes or skills that led to the conclusion that Mr. Ki ndler should serve as a director of the company, as required by Item 401(e)(1) of Regulation S -K.
Executive Compensation, page 111
21. We note the statement that you did not pay compensation to any of your executive officers. Please clarify whether any comp ensation was paid to your executive officers by your Predecessors. If so, please provide the disclosure required by Item 402 of Regulation S -K regarding that compensation. In addition, please revise to provide a more
Stephen L. Holcombe vTv Therapeutics Inc. June 10, 2015 Page 5
detailed discussion of the compensati on arrangements for officers after the completion of this offering.
22. Please file the employment agreements once entered into and discuss the terms to the extent known, if you have preliminary arrangements regarding these agreements. In addition, please ex plain the reference to your Chief Financial Officer. We do not see disclosure regarding this individual in the management section.
Certain Relationships and Related Party Transactions, page 113
23. Please provide all of the disclosure required by Item 404 of Regulation S -K. We note the balance sheet reflects a number of related party amounts and footnote 14 discusses related party transactions that are not discussed in this section.
Recent Sales of Unregistered Securities, page II -2
24. Please provide the dis closure required by Item 701 of Regulation S -K, including your predecessor’s transactions.
Undertakings, page II -3
25. Please include the Item 512(a)(5)(ii) and Item 512(a)(6) undertakings. Item 512(a)(5)(ii) is required for any prospectus filed in reliance on Rule 430C, and Item 512(a)(6) is required for any offering that involves an initial distribution of securities, pursuant to Rule 159A. For guidance, see Securities Act Rules Compliance and Disclosure Interpretation, Question 229.01.
Financial Statemen ts
vTv Therapeutics, Inc
Notes to Balance Sheet
1. Organization, page F -4
26. Please disclose your fiscal year end.
Stephen L. Holcombe vTv Therapeutics Inc. June 10, 2015 Page 6
TransTech Pharma, LLC and High Point Pharmaceuticals, LLC
Notes to Combined Consolidated Financial Statements
Recently Adopted Accounting Pronouncements, page F -16
27. HPCTC was sold to a former officer and director on December 30, 2014. You disclose that the disposal of HPCTC does not represent a strategic shift in operations and therefore is not presented as discontinued operation s. Considering your disclosure on page 70 that revenues for 2013 and 2014 are primarily related to clinical trial services provided by HPCTC and it appears that no revenue or continuing cash flows are expected to be generated upon disposal of HPCTC, tell us the basis for your conclusion that (a) the disposal of HPCTC, a major line of business generating significant revenue does not represent a strategic shift in operations (b) disposal of HPCTC will not have a major effect on your operations and financial results and (c) how your presentation is appropriate. Please explain to us in detail the factors you considered and how your presentation and disclosures comply with ASU No. 2014 -08. In this regard, please also expand your discussions in MD&A to discuss whether you will continue to generate revenue by providing clinical trial services and the impact of the disposal of HPCTC on your operations and financial results.
You may con tact Raj Rajan at (202) 551 -3388 or Rufus Decker at (202) 551 -3769 if you have questions regarding comments on the financial statements and related matters. Please contact Ronald E. Alper at (202) 551 -3329 or Pam Howell at (202) 551 -3357 with any other questions.
Sincerely,
/s/ Brigitte Lippmann (for)
Show Raw Text
June 10, 2015
Stephen L. Holcombe
President and Chief Executive Officer
vTv Therapeutics Inc.
4170 Mendenhall Oaks Pkwy
High Point, NC 27265
Re: vTv Therapeutics Inc.
Draft Registration Statement on Form S -1
Submitted May 14, 2015
CIK No. 0001641489
Dear Mr. Holcombe:
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 registra tion statement or filed registration statement, we may have additional
comments
General
1. 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 o n 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.
2. Please provide us with copies of any graphics, maps, photographs, and related captions or
other ar twork including logos that you intend to use in the prospectus.
Stephen L. Holcombe
vTv Therapeutics Inc.
June 10, 2015
Page 2
Prospectus Summary, page 1
The Reorganization Transactions, page 4
3. Please discuss the reasons for the structuring of the reorganization transaction.
4. You use the terms economic right, economic interest and economic ownership. Please
revise to describe what these terms mean. For example, in describing the economic
ownership held by the Registrant and vTv Therapeutics Holdings LLC in vTv
Therapeutics LLC, please clarify what economic ow nership is and explain whether or not
both owners will share in the economics on a pro rata basis based upon their economic
ownership percentage. If any material differences in rights exist, please disclose them as
well.
5. In the diagram of your corporate structure, you show operating subsidiaries below vTv
Therapeutics LLC. Please revise to present each operating subsidiary separately and
describe the nature and form of their voting and economic ownership. Please also revise
your disclosures to clarify h ow vTv Therapeutics LLC obtained each of these operating
subsidiaries and their relationship, if any, to the assets you state will be contributed to
vTv Therapeutics LLC by vTvx Holdings I and II.
Summary Historical and Pro Forma Financial Data, page 12
6. Please tell us the guidance you are relying upon in presenting pro forma net loss per share
information for the year ended December 31, 2013 or remove it from the filing. If you
intend to present a pro forma net loss per share amount under the historical column for
the year ended December 31, 2014, please revise your disclosures to clarify why it is
being presented, how it was computed and how it differs from the amount shown in the
pro forma column.
7. Please revise to also include your reorganization pro f orma information.
Risk Factors, page 13
Risks Relating to Our Dependence on Third Parties, page 29
We do not have multiple sources of supply . . ., page 31
8. Please clarify whether you have any material agreements with your suppliers. If so,
please file them as exhibits.
Stephen L. Holcombe
vTv Therapeutics Inc.
June 10, 2015
Page 3
Use of Proceeds, page 52
9. We note the disclosure regarding the intended use of proceeds. Please provide the
approximate amount intended to be used for each such purpose, as required by Item 504
of Regulation S -K.
10. We note the disclosure in the last two paragraphs of this section and in the third risk
factor on page 45 that the use of proceeds could change in the future as your plans and
business conditions evolve and that you retain broad discretion in the application of the
net proceeds from this offering. The company may reserve the right to change the use of
proceeds, provided that such reservation is due to certain contingencies that are discussed
specifically and the alternatives to such use in that event are indicated.
Unaudited Pro Forma Condensed Combined Consolidated Statements of Operations, page 59
11. You disclose your former subsidiary HPCTC, which provided clinical trial services, was
sold to a former officer and director on December 30, 2014. Please revise your pro forma
financial statements to give effect to the disposal of HPCTC in a separate column
preceding the reorganization adjustments column or explain to us why it is not
required. Please refer to Rules 11 -01(a)(4) and 11 -01(b) of Regulation S -X.
12. Please rev ise Notes (b) on pages 60 and 62 to disclose how the amount of each pro forma
adjustment was determined.
13. Please present reorganization pro forma earnings (loss) per share amounts. Please also
revise Note (c) on page 60 to disclose how the reorganization pro forma and pro forma
earnings (loss) per share amounts were computed and disclose any securities not included
in each computation for anti -dilutive reasons. In addition, please disclose the number of
offering shares included in the denominator used for computing pro forma earnings (loss)
per share and explain your basis for including them. Please also disclose the number of
offering shares not included and explain why they were not.
Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet, pa ge 61
14. It does not appear you have given pro forma effect to all of the reorganization
transactions disclosed on page 4. It appears after the reorganization transactions that
substantially all of vTvx Holdings I and II’s assets will have been contributed to vTv
Therapeutics LLC. In addition, it appears the Registrant will then hold a voting
managing member interest in vTv Therapeutics LLC with no economic interest. Please
tell us your basis for presenting the members’ equity o f vTvx Holdings I in the
reorganization pro forma column, rather than the equity of the Registrant. Please also
explain why no noncontrolling interest in vTv Therapeutics LLC has been
reflected. Please also address the related impact this would have on t he reorganization
pro forma column presented in your pro forma statement of operations.
Stephen L. Holcombe
vTv Therapeutics Inc.
June 10, 2015
Page 4
15. Please tell us whether or not the Registrant would meet the requirements for
consolidating vTv Therapeutics LLC after the reorganization transactions but before the
offering adjustments and provide us with the analysis you performed in reaching this
conclusion, including your consideration of the applicability of the variable interest entity
model in ASC 810. Please provide us with a similar consolidation analysis afte r the
offering adjustments.
16. Please disclose your proposed accounting for the acquisition of vTv Therapeutics LLC
Units with the offering proceeds and explain to us the basis for your accounting
treatment.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ,
page 65
Recently Issued Accounting Pronouncements Not Yet Adopted, page 75
17. You are in the process of assessing the impact of the adoption of ASU No. 2015 -02 on
your financial statements. Please update your disclos ures to address the expected
impact. Please also disclose here and elsewhere in the filing any characteristics of the
Registrant’s structure that could potentially impact your consolidation of vTv
Therapeutics LLC and/or other entities upon the adoption o f this ASU.
License Agreements, page 98
18. Please file the license agreement with Calithera as an exhibit.
19. Consider discussing the letter agreement with a former officer, as referenced in footnote
three to the financial statements and file the agreement as an exhibit.
Management, page 109
20. Please disclose time period during which Mr. Kindler has served in each employment
listed. In addition, please discuss the specific experience, qualifications, attributes or
skills that led to the conclusion that Mr. Ki ndler should serve as a director of the
company, as required by Item 401(e)(1) of Regulation S -K.
Executive Compensation, page 111
21. We note the statement that you did not pay compensation to any of your executive
officers. Please clarify whether any comp ensation was paid to your executive officers by
your Predecessors. If so, please provide the disclosure required by Item 402 of
Regulation S -K regarding that compensation. In addition, please revise to provide a more
Stephen L. Holcombe
vTv Therapeutics Inc.
June 10, 2015
Page 5
detailed discussion of the compensati on arrangements for officers after the completion of
this offering.
22. Please file the employment agreements once entered into and discuss the terms to the
extent known, if you have preliminary arrangements regarding these agreements. In
addition, please ex plain the reference to your Chief Financial Officer. We do not see
disclosure regarding this individual in the management section.
Certain Relationships and Related Party Transactions, page 113
23. Please provide all of the disclosure required by Item 404 of Regulation S -K. We note the
balance sheet reflects a number of related party amounts and footnote 14 discusses
related party transactions that are not discussed in this section.
Recent Sales of Unregistered Securities, page II -2
24. Please provide the dis closure required by Item 701 of Regulation S -K, including your
predecessor’s transactions.
Undertakings, page II -3
25. Please include the Item 512(a)(5)(ii) and Item 512(a)(6) undertakings. Item 512(a)(5)(ii)
is required for any prospectus filed in reliance on Rule 430C, and Item 512(a)(6) is
required for any offering that involves an initial distribution of securities, pursuant to
Rule 159A. For guidance, see Securities Act Rules Compliance and Disclosure
Interpretation, Question 229.01.
Financial Statemen ts
vTv Therapeutics, Inc
Notes to Balance Sheet
1. Organization, page F -4
26. Please disclose your fiscal year end.
Stephen L. Holcombe
vTv Therapeutics Inc.
June 10, 2015
Page 6
TransTech Pharma, LLC and High Point Pharmaceuticals, LLC
Notes to Combined Consolidated Financial Statements
Recently Adopted Accounting Pronouncements, page F -16
27. HPCTC was sold to a former officer and director on December 30, 2014. You disclose
that the disposal of HPCTC does not represent a strategic shift in operations and therefore
is not presented as discontinued operation s. Considering your disclosure on page 70 that
revenues for 2013 and 2014 are primarily related to clinical trial services provided by
HPCTC and it appears that no revenue or continuing cash flows are expected to be
generated upon disposal of HPCTC, tell us the basis for your conclusion that (a) the
disposal of HPCTC, a major line of business generating significant revenue does not
represent a strategic shift in operations (b) disposal of HPCTC will not have a major
effect on your operations and financial results and (c) how your presentation is
appropriate. Please explain to us in detail the factors you considered and how your
presentation and disclosures comply with ASU No. 2014 -08. In this regard, please also
expand your discussions in MD&A to discuss whether you will continue to generate
revenue by providing clinical trial services and the impact of the disposal of HPCTC on
your operations and financial results.
You may con tact Raj Rajan at (202) 551 -3388 or Rufus Decker at (202) 551 -3769 if you
have questions regarding comments on the financial statements and related matters. Please
contact Ronald E. Alper at (202) 551 -3329 or Pam Howell at (202) 551 -3357 with any other
questions.
Sincerely,
/s/ Brigitte Lippmann (for)
John Reynolds
Assistant Director
cc: Lawrence G. Wee, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison LLP