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United States securities and exchange commission logo
December 2, 2020
Michael Landsittel
Chief Financial Officer
Blueprint Medicines Corp
45 Sidney Street
Cambridge, Massachusetts 02139
Re: Form 10-K for the
Fiscal Year Ended December 31, 2019
Filed February 13,
2020
Form 10-Q for the
Fiscal Quarter Ended September 30, 2020
Filed October 29,
2020
File No. 001-37359
Dear Mr. Landsittel:
We have limited our review of your filing to the financial
statements and related
disclosures 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 these 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 these comments, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2019
Notes to the Consolidated Financial Statements
2. Summary of Significant Accounting Policies and Recent Accounting
Pronouncments
Revenue Recognition - Research and Development Services, page F-12
1. You state that payments
or reimbursements from and payments to the partner that are the
result of a
collaborative relationship with the partner, instead of a customer
relationship,
such as co-development
activities, are recorded as a reduction to research and
development. We note on
page 98 of the 10-K and page 36 of the September 30, 2020 10-
Q that you state that
research and development activities are central to your business
model. Please address
the following:
Tell us why you
believe recording the reimbursements as a reduction of research and
development for
collaborative arrangements is appropriate. In this respect, clarify
why you believe
that research and development activities are, or are not, part of your
Michael Landsittel
FirstName LastNameMichael Landsittel
Blueprint Medicines Corp
Comapany2,
December NameBlueprint
2020 Medicines Corp
December
Page 2 2, 2020 Page 2
FirstName LastName
ongoing major or central operations/ordinary activities.
Address the example in ASC 808-10-55-7 through 55-10 and
differentiate how your
fact pattern for each collaboration agreement, including the
Roche July 2020
agreement, differs from the example.
Cite any other applicable guidance you considered in
determining your accounting
treatment and provide proposed disclosure to clarify your
accounting policy, if
necessary.
Form 10-Q for the Nine Months Ended September 30, 2020
Notes to the Consolidated Financial Statements
10. Collaboration and License Agreements, page 15
2. You state on page 15 that on July 13, 2020 you entered into a
collaboration agreement
with Roche pursuant to which you granted Roche an exclusive right to
develop and
commercialize pralsetinib worldwide, excluding the CStone territory,
and a co-exclusive
license in the U.S. to develop and commercialize pralsetinib. You
state on page 16 that
the agreement contains four material components. Please address the
following:
Tell us how you applied ASU 2018-18 to determine that part of the
agreement should
not be accounted for under ASC 606. In this respect, tell us why
the collaborative
partner is not considered a customer within the unit of account
under ASU 2018-18
that would be required to be accounted for under ASC 606.
For the portion of the agreement you believe is outside ASC 606,
clarify what
authoritative literature you are using or what methodology you
are using to account
for the non-ASC 606 portion. Refer to ASC 808-10-45-3.
Explain why the entire $695.7 million was allocated to the
components accounted for
under ASC 606 and why some of the amount was not required to be
allocated to the
other material components of the agreement.
Please clarify the nature of the transition date discussed on page
17, why that date
determines if you are the principal for the product sales, and if
at that point,
reimbursements will also be recorded as revenue. Clarify how the
fact pattern
compares to Example 3 in ASC 808-10-55-11 through 55-14 and
provide any
authoritative support.
Management's Discussion and Analysis
Financial Operations Overview
Cost of Sales, page 34
3. You state on page 10 that until the date at which regulatory approval
has been received or
is otherwise considered probable, you record all costs as research and
development
expenses. You disclose on page 34 that cost of sales for newly
launched products will not
be significant until the initial pre-launch inventory is depleted, and
additional inventory is
manufactured. You also state that the gross margin was enhanced by
amounts previously
Michael Landsittel
Blueprint Medicines Corp
December 2, 2020
Page 3
expensed as research and development expense in prior year. Please
provide proposed
disclosure to include in future filings to address the following:
the amount of estimated revenues represented by inventory on hand
at September 30,
2020 for which manufacturing costs were expensed in prior periods
as research and
development expenses (i.e."zero cost inventories"),
when you expect to finish selling the zero cost inventories,
the extent to which inventory capitalized may be required to be
classified as non-
current, and
what you estimate your gross margin percentage will be after the
zero cost
inventories are sold.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Ibolya Ignat at (202) 551-3636 or Mary Mast at (202)
551-3613 with
any questions.
FirstName LastNameMichael Landsittel Sincerely,
Comapany NameBlueprint Medicines Corp
Division of
Corporation Finance
December 2, 2020 Page 3 Office of Life
Sciences
FirstName LastName