April 3, 2019
Tran Nguyen
Chief Operating Officer and Financial Officer
Prothena Corporation plc
Adelphi Plaza
Upper George's Street
D n Laoghaire
Co. Dublin, A96 T927, Ireland
Re: Prothena Corp plc
Form 10-K for the Fiscal Year Ended December 31, 2017
Filed February 26, 2018
Form 10-Q for the Quarterly Period Ended September 30, 2018
Filed November 6, 2018
File No. 001-35676
Dear Mr. Nguyen:
We have reviewed your January 22, 2019 response as supplemented by your
February 28,
2019 response to our comment letter and have the following comments. In our
comments, we
may ask you to provide us with information so we may better understand your
disclosure.
Please respond to the comments within ten business days by providing the
requested
information or advise 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 the comments, we may have additional
comments. Unless we note otherwise, our references to prior comments are to
comments in
our December 19, 2018 letter.
Form 10-Q for the Quarterly Period Ended September 30, 2018
Item 1. Financial Statements (unaudited)
Notes to the Condensed Consolidated Financial Statements
8. Significant Agreements
Celgene Collaboration Agreement, page 18
1. Please propose revised disclosure that:
articulates consistently when Celgene would have "decision making
authority over
Tran Nguyen
FirstName LastNameTran Nguyen
Prothena Corporation plc
Comapany NameProthena Corporation plc
April 3, 2019
April 2 2019 Page 2
Page 3,
FirstName LastName
development activities and all regulatory, manufacturing and
commercialization
activities in the U.S." We note that the first paragraph of the
Overview section
indicates this occurs upon Celgene's exercise of the option to
acquire U.S. Rights
whereas the first paragraph of the Celgene U.S. and Global Rights
and Licenses
section indicates this occurs "following Phase 1."
clarifies whether the exclusive license to develop and
commercialize that Celgene will
receive upon exercise of its options for U.S. Rights and Global
Rights includes the
right to manufacture.
quantifies the regulatory and commercial milestones per program
the Company is
eligible to receive after Celgene's exercise of U.S. Rights.
2. Please analyze for us whether your contract with Celgene includes one
or more implied
promises by Prothena to perform research and development services
prior to the filing of
an IND. We make this request because your response appears to be
limited to whether an
explicit promise exists, nonetheless promises may be implied by an
entity's customary
business practices, published policies or specific statements (ASC
606-10-25-16); implied
promises need not be enforceable at law (ASC No. 2014-09 BC87); and
the illustrative
statements below appear to imply such a promise.
"And that's essentially the way we kind of move that into the R&D.
So again to
reiterate, we're responsible for research and development through
Phase I. So to be
clear, that includes CMC, that includes regulatory, basically
every other function in
there." March 20, 2018 Prothena Corporation PLC Neuroscience R&D
Collaboration Investor Call
"Prothena will lead and have final decision-making authority over
all programs
through Phase I, unless Celgene elects otherwise at its expense."
- March 20, 2018
Prothena Corporation PLC Neuroscience R&D Collaboration Investor
Call
"And as you may recall, Prothena is responsible for the execution of
these programs
through the preclinical and early clinical stages, dependent upon
various clinical
option exercise [indiscernible] by Celgene." Q4 2018 Earnings
Transcript
"... this collaboration provides Prothena the opportunity to work
with a premier
scientific partner and the resources and flexibility to advance
these programs while
continuing to expand our proprietary discovery activities ...."
March 20, 2018 Press
Release.
"For Prothena, it offers the opportunity to work with a premier
scientific partner with
complementary biological expertise and also provides the resources
and flexibility to
advance in parallel both the programs within the scope of this
collaboration as well as
our proprietary discovery activities..." March 20, 2018 Press
Release.
"...from the Prothena side, this provides an opportunity to
accelerate and expand our
discovery activities and to do it with expertise and input that we
may not otherwise
have access to. And so from our perspective, being able to work
with a scientific team
is actually quite attractive. And obviously from a resource
perspective, we do think
that this not only advantages the collaboration but advantages our
discovery
organization beyond the collaboration as well. So we actually see
this as an
Tran Nguyen
Prothena Corporation plc
April 3, 2019
Page 3
opportunity to accelerate things that we were looking forward to
working on. And
actually these are targets that were obviously high on our list
and we were doing an
extensive amount of work on in any event." - March 20, 2018
Prothena Corporation
PLC Neuroscience R&D Collaboration Investor Call
3. With respect to your assertion that the license rights conveyed to
Celgene are not material
in the context of the contract, please reconcile for us why the
following rights granted to
Celgene would nonetheless not be viewed as important by Celgene.
right to access intellectual property for six years through the
requirement to be notified
on a regular basis of the Company's ongoing research activities,
material
developments, and new material data or information (see for
example Section 2.2.2.a.
and b.)
right to use the Company's licensed intellectual property to conduct
its activities and
perform its obligations under the Agreement (see for example
Section 7.1.1)
right to use the Company's licensed intellectual property for six
years for purposes
other than evaluating whether to exercises its option (see for
example Section 2.9.1)
right to use for research and development purposes (see page PRTA
1003 of your
January 22, 2019 response).
4. Please reconcile for us the statements in your most recent disclosure
in Note 8 to the
financial statements included in your December 31, 2018 Form 10-K that
the options for
U.S. Rights and Global Rights represent material rights and the
Company's conclusion
that it does not have a material distinct performance obligation at
the inception of the
Collaboration Agreement. In your reply, please provide your analysis
as to whether one or
more material rights exists, including whether the exercise price of
each option reflects the
standalone selling price for the goods and services subject to each
option and how you
made that determination.
5. Please consider updating your analysis of the performance obligations
in the contract
based on your responses to the foregoing comments.
6. Tell us how you considered the guidance in ASC 730-20 in accounting
for this
arrangement.
You may contact Tabatha McCullom at 202-551-3658 or Frank Wyman at
202-551-3660,
if you have any questions regarding the comments.
FirstName LastNameTran Nguyen Sincerely,
Comapany NameProthena Corporation plc
Division of
Corporation Finance
April 3, 2019 Page 3 Office of
Healthcare & Insurance
FirstName LastName