SEC Comment Letter for Aptevo Therapeutics Inc. (APVO) (CIK 0001671584) (APVO) — May 13, 2016
Aptevo Therapeutics Inc. (APVO) (CIK 0001671584)
Date: May 13, 2016 · CIK: 0001671584 · Accession: 0000000000-16-076282
AI Filing Summary & Sentiment
Reasoning
Letter
Mail Stop 4720 May 12, 2016 Robert G. Kramer President Aptevo Therapeutics Inc. 2401 4th Avenue, Suite 1050 Seattle, WA 98121
Re: Aptevo Therapeutics Inc. Registration Statement on Form 10 Filed April 15, 2016 File No. 001 -37746
Dear Mr. Kramer:
We have reviewed your filing an d 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 these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments, we may have additional comments.
Exhibit 99, Information Statement Information Statement Summary
1. Please clarify the meaning of any significant scientific or technical terms the first time they are used in the information statement in order to ensure that lay readers will understand the disclosure. For example, please define each of the following at their first use in this section or where appropriate in the information statement:
bispecific therapeutic T-cell cytotoxicity anti-D product factor IX therapeutic anti-CD37 and anti -CD-20
Robert G. Kramer Aptevo Therapeutics Inc. May 12, 2016 Page 2
Similarly, please revise the information stateme nt to explain the meaning of any important scientific terms or concepts in your Business discussion that are reasonably likely to unfamiliar to lay readers.
Risk Factors We have a history of losses and may not be profitable in the future, page 20
2. Please disclose the total amount of your accumulated deficit.
Our Biologic Products may face risks of competition from biosimilar manufacturers, page 24
3. To help investors better understand the risks presented, p lease indicate the remaining exclusivity period for each of your Biologic Products i n both the United States and Europe Union. Additionally, please indicate which Biologic Products are sold in the European Union and the percentage of each product’s overall revenues that are derived from European Union sales.
Following the separation, t he loss of any of our sole source manufacturers…,, page 27
4. To the extent that you are substantially dependent on any sole source suppliers for a material product, please identify the products and the supplier and disclose whether you have long term supply agreements with these suppliers. If you do, please file the agreements as exhibits or tell us the basis for your determination that they are not required exhibits.
International patent protection is particularly uncertain . . ., page 46
5. We note your disclosure that your IXINITY product is currently facing opposition proceedings in Europe and that, depen ding on the final outcome of these proceedings, you may be unable to sell certain factor IX products in Europe. To help investors better assess this risk, please disclose the percentage of your overall revenues that are derived from products that may be s ubject to these proceedings.
Risks related to Aptevo’s common stock, page 60
6. Please include a risk factor disclosing the exclusive forum provision provided for in your by - laws.
Unaudited Pro Forma Combined Balance Sheet, page 69
7. Please tell us the basis for reflecting a $20 million note receivable from Emergent upon separation as an asset. It would appear that this is t antamount to a receivable for sale of stock as discussed in SAB 4.E.
Robert G. Kramer Aptevo Therapeutics Inc. May 12, 2016 Page 3
Business Overview, page 71
8. Please clarify whether your current products dependent on the ADAPTIR platform.
Collaboration, Licenses and Support Agreements Collaboration with MorphoSys AG to Develop MOR209/ES414 , page 73
9. Please briefly disclose the factors that led you to adjust development of MOR209/ES414.
Agreements with Emergent for Commercial Manufacturing Services and Transition Services, page 73
10. Please disclose the expiration date of the Manufacturing Services A greement with Emergent following the separation . Additionally, please indicate the extent to which you believe you will rely on Emergent for the manufacture of future marketed products, including your current product candidates.
11. We note that the agreements you intend to enter into with Emergent includ e a trademark license agreement and a pro duct license agreement. Please separately describe these agreements, including the provisions that would allow Emergent to terminate the agreements.
Platform Technology and Product Portfolio Product Portfolio, page 74
12. Please clarify whether you will own the rights to ADAPTIR or whether you will license the rights from Emergent or another party. If you own the rights, please discuss whether you developed it internally or acquired it from another party.
13. With regard to your disclosure describing the manner in which each of your p roducts functions, please revise your discussion to reduce your reliance on technical terms or to ensure that your use of technical terminology is sufficiently comprehensible to lay investors.
Product Portfolio, page74
14. To the extent y ou have experienced any serious adverse events pertaining to your product candidates to date, please include these in your disclosure and consider including a risk factor discussion specific to such adverse events.
15. Please quantify or further explain the manner in which the Phase 2 clinical trial combining olertuzumab and bendamustine was superior to trials involving bendamustine alone.
Robert G. Kramer Aptevo Therapeutics Inc. May 12, 2016 Page 4
Management Executive Officers Following the Separation, page 100
16. Please expand the description of Mr. Lamothe ’s business experience to disclose the years he was the CFO at Cangene Corporation and any additional information required by Item 401(e) of Regulation S -K.
Executive Compensation Summary Compensation Table, page 120
17. We note that Mr. White received in excess of $100,000 in “All Other Compensation” for the 2015 fiscal period. Please quantify and disclose in a footnote to the Summary Compensation Table each perquisite or personal benefit that exceeded $25,000 or 10% of the total amount of perquisites and personal benefits that Mr. White received in 2015 pursuant to Instruction 4 to Item 402(c)(2)(ix) of Regulation S -K.
Notes to Combined Financial Statements
1. Nature of Business and Basis of Presentation, page F -7
18. Please tell us how you intend to account for the incorporation of Aptevo in February 2016 within these financial statements upon the issuance of the March 31, 2016 interim financial statements including whether and, if so, to what extent you will retroactively reflect its capital structure in loss per share for each period presented.
2. Summary of significant accounting policies Segment reporting, page F -13
19. Please disclose revenue by product as required by ASC 280 -10-50-40. In addition, provide disclosure about geographic areas and major customers, as applicable, as required by ASC 280-10-50-41 and 50 -42.
General
20. We will deliver comments to your confidential treatment request under separate cover.
You may contact Bonnie Baynes, Staff Accountant, at (202) 551 -4924 or James Rosenberg, SACA, at (202) 551 -3679 if you have questions regarding comments on the financial statements and related matters. Please contact Josh Samples, Staf f Attorney, at (202) 551 -3199 or me at (202) 551 -3675 with any other questions.
Robert G. Kramer Aptevo Therapeutics Inc. May 12, 2016 Page 5
Sincerely,
/s/ Suzanne Hayes
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Mail Stop 4720 May 12, 2016 Robert G. Kramer President Aptevo Therapeutics Inc. 2401 4th Avenue, Suite 1050 Seattle, WA 98121 Re: Aptevo Therapeutics Inc. Registration Statement on Form 10 Filed April 15, 2016 File No. 001 -37746 Dear Mr. Kramer: We have reviewed your filing an d 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 these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Exhibit 99, Information Statement Information Statement Summary 1. Please clarify the meaning of any significant scientific or technical terms the first time they are used in the information statement in order to ensure that lay readers will understand the disclosure. For example, please define each of the following at their first use in this section or where appropriate in the information statement: bispecific therapeutic T-cell cytotoxicity anti-D product factor IX therapeutic anti-CD37 and anti -CD-20 Robert G. Kramer Aptevo Therapeutics Inc. May 12, 2016 Page 2 Similarly, please revise the information stateme nt to explain the meaning of any important scientific terms or concepts in your Business discussion that are reasonably likely to unfamiliar to lay readers. Risk Factors We have a history of losses and may not be profitable in the future, page 20 2. Please disclose the total amount of your accumulated deficit. Our Biologic Products may face risks of competition from biosimilar manufacturers, page 24 3. To help investors better understand the risks presented, p lease indicate the remaining exclusivity period for each of your Biologic Products i n both the United States and Europe Union. Additionally, please indicate which Biologic Products are sold in the European Union and the percentage of each product’s overall revenues that are derived from European Union sales. Following the separation, t he loss of any of our sole source manufacturers…,, page 27 4. To the extent that you are substantially dependent on any sole source suppliers for a material product, please identify the products and the supplier and disclose whether you have long term supply agreements with these suppliers. If you do, please file the agreements as exhibits or tell us the basis for your determination that they are not required exhibits. International patent protection is particularly uncertain . . ., page 46 5. We note your disclosure that your IXINITY product is currently facing opposition proceedings in Europe and that, depen ding on the final outcome of these proceedings, you may be unable to sell certain factor IX products in Europe. To help investors better assess this risk, please disclose the percentage of your overall revenues that are derived from products that may be s ubject to these proceedings. Risks related to Aptevo’s common stock, page 60 6. Please include a risk factor disclosing the exclusive forum provision provided for in your by - laws. Unaudited Pro Forma Combined Balance Sheet, page 69 7. Please tell us the basis for reflecting a $20 million note receivable from Emergent upon separation as an asset. It would appear that this is t antamount to a receivable for sale of stock as discussed in SAB 4.E. Robert G. Kramer Aptevo Therapeutics Inc. May 12, 2016 Page 3 Business Overview, page 71 8. Please clarify whether your current products dependent on the ADAPTIR platform. Collaboration, Licenses and Support Agreements Collaboration with MorphoSys AG to Develop MOR209/ES414 , page 73 9. Please briefly disclose the factors that led you to adjust development of MOR209/ES414. Agreements with Emergent for Commercial Manufacturing Services and Transition Services, page 73 10. Please disclose the expiration date of the Manufacturing Services A greement with Emergent following the separation . Additionally, please indicate the extent to which you believe you will rely on Emergent for the manufacture of future marketed products, including your current product candidates. 11. We note that the agreements you intend to enter into with Emergent includ e a trademark license agreement and a pro duct license agreement. Please separately describe these agreements, including the provisions that would allow Emergent to terminate the agreements. Platform Technology and Product Portfolio Product Portfolio, page 74 12. Please clarify whether you will own the rights to ADAPTIR or whether you will license the rights from Emergent or another party. If you own the rights, please discuss whether you developed it internally or acquired it from another party. 13. With regard to your disclosure describing the manner in which each of your p roducts functions, please revise your discussion to reduce your reliance on technical terms or to ensure that your use of technical terminology is sufficiently comprehensible to lay investors. Product Portfolio, page74 14. To the extent y ou have experienced any serious adverse events pertaining to your product candidates to date, please include these in your disclosure and consider including a risk factor discussion specific to such adverse events. 15. Please quantify or further explain the manner in which the Phase 2 clinical trial combining olertuzumab and bendamustine was superior to trials involving bendamustine alone. Robert G. Kramer Aptevo Therapeutics Inc. May 12, 2016 Page 4 Management Executive Officers Following the Separation, page 100 16. Please expand the description of Mr. Lamothe ’s business experience to disclose the years he was the CFO at Cangene Corporation and any additional information required by Item 401(e) of Regulation S -K. Executive Compensation Summary Compensation Table, page 120 17. We note that Mr. White received in excess of $100,000 in “All Other Compensation” for the 2015 fiscal period. Please quantify and disclose in a footnote to the Summary Compensation Table each perquisite or personal benefit that exceeded $25,000 or 10% of the total amount of perquisites and personal benefits that Mr. White received in 2015 pursuant to Instruction 4 to Item 402(c)(2)(ix) of Regulation S -K. Notes to Combined Financial Statements 1. Nature of Business and Basis of Presentation, page F -7 18. Please tell us how you intend to account for the incorporation of Aptevo in February 2016 within these financial statements upon the issuance of the March 31, 2016 interim financial statements including whether and, if so, to what extent you will retroactively reflect its capital structure in loss per share for each period presented. 2. Summary of significant accounting policies Segment reporting, page F -13 19. Please disclose revenue by product as required by ASC 280 -10-50-40. In addition, provide disclosure about geographic areas and major customers, as applicable, as required by ASC 280-10-50-41 and 50 -42. General 20. We will deliver comments to your confidential treatment request under separate cover. You may contact Bonnie Baynes, Staff Accountant, at (202) 551 -4924 or James Rosenberg, SACA, at (202) 551 -3679 if you have questions regarding comments on the financial statements and related matters. Please contact Josh Samples, Staf f Attorney, at (202) 551 -3199 or me at (202) 551 -3675 with any other questions. Robert G. Kramer Aptevo Therapeutics Inc. May 12, 2016 Page 5 Sincerely, /s/ Suzanne Hayes Suzanne Hayes Assistant Director Office of Healthcare and Insurance cc: Eric Burt Emergent BioSolutions Inc. Hal Leibowitz Joseph Conahan Wilmer Cutler Pickering Hale and Dorr LLP