<SEC-DOCUMENT>0000914475-21-000051.txt : 20211214
<SEC-HEADER>0000914475-21-000051.hdr.sgml : 20211214
<ACCEPTANCE-DATETIME>20211005193406
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000914475-21-000051
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20211005

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NEUROCRINE BIOSCIENCES INC
		CENTRAL INDEX KEY:			0000914475
		STANDARD INDUSTRIAL CLASSIFICATION:	BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
		IRS NUMBER:				330525145
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		12780 EL CAMINO REAL
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92130
		BUSINESS PHONE:		(858) 617-7600

	MAIL ADDRESS:	
		STREET 1:		12780 EL CAMINO REAL
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92130
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
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<title>Document</title></head><body><div id="ic49dce16906f488c81987e163ffc4b1b_33"></div><div style="min-height:72pt;width:100%"><div><font><br></font></div></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">October 5, 2021</font></div><div><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Via EDGAR and FedEx</font></div><div style="text-align:justify"><font><br></font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Ms. Jeanne Baker</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Mr. Terence O'Brien</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">United States Securities and Exchange Commission</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Division of Corporation Finance</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Office of Life Sciences</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">100 F Street, NE Washington, DC 20549</font></div><div><font><br></font></div><div style="padding-left:36pt;text-indent:-36pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Re&#58;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">       </font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Neurocrine Biosciences, Inc.</font></div><div style="padding-left:36pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Form 10-K for the fiscal year ended December 31, 2020, filed February 5, 2021</font></div><div style="padding-left:36pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Form 8-K filed August 3, 2021</font></div><div style="padding-left:36pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Form 8-K filed February 4, 2021</font></div><div style="padding-left:36pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">File No. 000-22705</font></div><div><font><br></font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Ladies and Gentlemen&#58;</font></div><div><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">This letter is being transmitted by Neurocrine Biosciences, Inc. (the &#8220;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">Company</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">&#8221;) in response to comments received from the staff (the &#8220;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">Staff</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">&#8221;) of the Securities and Exchange Commission (the &#8220;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">SEC</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">&#8221;), by letter dated September 22, 2021 (the &#8220;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">Comment Letter</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">&#8221;), with respect to the Company&#8217;s (i) Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the &#8220;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">10-K</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">&#8221;), (ii) Current Report on Form 8-K filed on August 3, 2021 (the &#8220;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">August 8-K</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">&#8221;) and (iii) Current Report on Form 8-K filed on February 4, 2021 (the &#8220;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">February 8-K</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">&#8221;). The text of the Staff&#8217;s comments has been included in this letter in italics for your convenience, and we have numbered the paragraphs below to correspond to the numbering of the Comment Letter.</font></div><div style="text-align:justify"><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;text-decoration:underline">Form 10-K for the Fiscal Year Ended December 31, 2020 </font></div><div style="text-align:justify"><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;text-decoration:underline">Management's Discussion and Analysis</font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;text-decoration:underline">Research and Development, page 54</font></div><div style="text-align:justify"><font><br></font></div><div style="text-align:justify;text-indent:36pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">1.</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;padding-left:27.67pt">We have the following comments on your research and development disclosures&#58;</font></div><div style="text-align:justify;text-indent:18pt"><font><br></font></div><div style="padding-left:67.5pt;text-align:justify;text-indent:-13.5pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">&#8226;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;padding-left:10pt">Please disclose the costs incurred during each period presented for each of your key research and development programs. If you do not track your research and development costs by program, please disclose that fact and explain why you do not maintain and evaluate research and development costs by program&#59;</font></div><div style="padding-left:18pt;text-align:justify;text-indent:18pt"><font><br></font></div><div style="padding-left:67.5pt;text-align:justify;text-indent:-13.5pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">&#8226;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;padding-left:10pt">Notwithstanding the above bullet, we note that you separately present milestone payments, payroll and benefits, and facilities and other expenses. Given that these costs are separately presented, please explain the nature of the costs you include in the Late, Early and Research and discover stages&#59; and</font></div><div style="padding-left:18pt;text-align:justify;text-indent:18pt"><font><br></font></div><div style="padding-left:67.5pt;text-align:justify;text-indent:-13.5pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">&#8226;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;padding-left:10pt">Please expand upon your statement that the increase in R&#38;D expense from 2019 to 2020 was primarily the result of increased investment to support advancing your clinical portfolio to provide greater insight into the drivers of this increased investment.</font></div><div style="height:72pt;position:relative;width:100%"><div style="bottom:0;position:absolute;width:100%"><div><font><br></font></div></div></div><hr style="page-break-after:always"><div style="min-height:72pt;width:100%"><div><font><br></font></div></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">United States Securities and Exchange Commission</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">October 5, 2021</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Page Two</font></div><div><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Response&#58; </font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">With respect to the first part of Comment #1, the Company is supplementally providing to the Staff under separate cover a summary of the costs incurred during each period presented for each of the Company&#8217;s key research and development programs.</font></div><div><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In addition, the Company respectfully advises the Staff that in recent years, the Company has shifted its business strategy as a result of migrating from a research and development (</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">&#8220;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">R&#38;D</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">&#8221;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">) only company with only a few clinical development programs to a commercial and R&#38;D enterprise with a substantially different business and financial profile. As a result of this business profile change, the Company&#8217;s R&#38;D strategy has expanded from out-licensing certain of its internally developed compounds to focusing on continued internal R&#38;D and selectively acquiring rights to programs, primarily mid-to-late stage, development and commercial products to take advantage of its drug development and commercial capabilities. More specifically, since 2017 the Company&#8217;s clinical development pipeline has expanded from 3 to 12 clinical development programs. To manage its expanded clinical development pipeline and enterprise risk profile, the Company takes a portfolio approach that balances the size of the market opportunities with clear and defined clinical and regulatory paths to approval.</font></div><div><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Although the Company tracks its external R&#38;D costs by development program, the Company evaluates such costs by development stage to make operating and business development decisions assessing capital and resource allocation decisions. The Company believes its pipeline is better evaluated by development stage as each stage of development reflects a distinct level of cost and risk profile. For example, early-stage programs carry more risk and require more time until commercialization, while late-stage programs are further along in development but require a more significant level of investment.</font></div><div><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">A summary of how the Company allocates R&#38;D costs by development stage is described under the response to the second part of Comment #1 below.</font></div><div><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">With respect to the second part of Comment #1, the Company respectfully advises the Staff that for each of the Company&#8217;s R&#38;D programs, the Company incurs both external and internal expenses. External development expenses consist of costs in the Late, Early and Research and Discovery development stages and include costs incurred for clinical and non&#8209;clinical activities (such as those performed by contract research organizations and collaboration partners), scientific consulting fees, laboratory services, purchases of clinical trial drug product materials and third&#8209;party manufacturing development costs. The Company does not allocate milestone expenses to allow for a clearer view of normal, recurring R&#38;D expense trends. Internal R&#38;D expenses consist of payroll and benefits expenses, facilities expense, and other indirect R&#38;D expenses incurred in support of overall R&#38;D activities and as such are not allocated to a specific development stage.</font></div><div><font><br></font></div><div style="padding-left:36pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In addition, the Company respectfully advises the Staff that a description of Research and Development Expenses is included in Note 1 to Company&#8217;s Consolidated Financial Statements. Specifically, the Company directs the Staff&#8217;s attention to the following disclosure contained on page 73 of the 10-K&#58;</font></div><div style="height:72pt;position:relative;width:100%"><div style="bottom:0;position:absolute;width:100%"><div style="text-align:center"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">2</font></div></div></div><hr style="page-break-after:always"><div style="min-height:72pt;width:100%"><div><font><br></font></div></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">United States Securities and Exchange Commission</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">October 5, 2021</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Page Three</font></div><div><font><br></font></div><div style="padding-left:67.5pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">&#8220;Research and Development Expenses. </font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">R&#38;D expenses consist primarily of salaries, payroll taxes, employee benefits and share-based compensation charges for those individuals involved in ongoing R&#38;D efforts&#59; as well as scientific consulting fees, preclinical and clinical trial costs, R&#38;D facilities costs, laboratory supply costs and depreciation of scientific equipment. All such costs are charged to R&#38;D expense as incurred. These expenses result from our independent R&#38;D efforts, as well as efforts associated with collaborations, in-licenses and third-party funded research arrangements, including event-based milestones.&#8221;</font></div><div style="padding-left:36pt;text-align:justify"><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">To address the Staff&#8217;s comment, the Company commits that, to the extent applicable, it will disclose the nature of the costs included in the Late, Early and Research and Discovery development stages in the Management&#8217;s Discussion and Analysis section in its future 10-Q and 10-K filings with the SEC. To facilitate the Staff&#8217;s review, attached as Exhibit A to this letter is an example of such modified disclosures based on the 10-K.</font></div><div><font><br></font></div><div style="padding-left:36pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">With respect to the third part of Comment #1, the Company respectfully advises the Staff that the increase in R&#38;D expense from 2019 to 2020 was primarily due to the increased investment to support the Company&#8217;s research and discovery programs and advancing clinical portfolio, including increased investment in the Company&#8217;s (i) Phase III programs in congenital adrenal hyperplasia for adults and for pediatric patients, and continued enrollment of the Company&#8217;s Phase III Huntington Disease trial, and (ii) the Company&#8217;s early-stage programs, including three in-licensed psychiatry clinical development programs in mid-2020 and advancement of the Company&#8217;s two in-licensed epilepsy programs which began at the end of 2019. The Company commits that, to the extent applicable, the Company will provide expanded disclosure related to changes in R&#38;D expenses in its future 10-Q and 10-K filings with the SEC.</font></div><div style="padding-left:36pt"><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;text-decoration:underline">Form 8-K filed August 3, 2021</font></div><div><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;text-decoration:underline">Exhibit 99.1, page 1</font></div><div><font><br></font></div><div style="padding-left:36pt;text-indent:-36pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">2.</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;padding-left:27.67pt">We note that you have excluded milestone payments received from licenses and collaborations, milestones paid related to licenses and collaborations, non-cash collaboration revenue and acquired in-process research and development to arrive at non-GAAP net income and non-GAAP income per share. We also note that you have excluded milestones paid related to licenses and collaborations to arrive at non-GAAP R&#38;D. Please tell us your consideration of the guidance in Question 100.01 of the Non-GAAP Financial Measures Compliance and Disclosure Interpretations for these adjustments. In this regard, you disclose in your Form 10-K that one of your business strategies is to utilize strategic alliances to enhance your development and commercialization capabilities. You also provide a risk factor which indicates that you depend on your current collaborators for the development and commercialization of several of your products and product candidates and may need to enter into future collaborations to develop and commercialize certain of your product candidates.</font></div><div style="text-indent:-18pt"><font><br></font></div><div style="padding-left:36pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Response&#58; </font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Company acknowledges the Staff&#8217;s comment and respectfully advises the Staff that the Company has reviewed the Compliance and Disclosure Interpretations on Non-GAAP Measures in responding to Comment #2.</font></div><div style="height:72pt;position:relative;width:100%"><div style="bottom:0;position:absolute;width:100%"><div style="text-align:center"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">3</font></div></div></div><hr style="page-break-after:always"><div style="min-height:72pt;width:100%"><div><font><br></font></div></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">United States Securities and Exchange Commission</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">October 5, 2021</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Page Four</font></div><div><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Company&#8217;s policy is to supplement its GAAP consolidated financial statements and GAAP financial measures with other financial measures, such as non-GAAP R&#38;D expense, non-GAAP SG&#38;A expense, and non-GAAP net income and net income per share. These measures are referred to as &#8220;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">Non-GAAP Financial Measures</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">.&#8221;</font></div><div><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Company believes that these Non-GAAP Financial Measures provide additional insight into the normal and recurring economics of the Company&#8217;s business and reflect how the Company manages its business internally and sets operational goals. The Company acknowledges that Non-GAAP Financial Measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.</font></div><div><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Company excludes from non-GAAP net income and non-GAAP income per share milestone payments received from licenses and collaborations, milestones paid related to licenses and collaborations, non-cash collaboration revenue and acquired in-process research and development (&#8220;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">IPR&#38;D</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">&#8221;) expense. The Company excludes from Non-GAAP R&#38;D expense milestones paid related to licenses and collaborations. These exclusions are collectively referred to as &#8220;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">Non-GAAP Adjustments</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">.&#8221;</font></div><div><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Company believes that these Non-GAAP Adjustments differ from the normal, recurring, cash items necessary to operate its business. Below is a description of the Non-GAAP Adjustments&#58;</font></div><div><font><br></font></div><div style="padding-left:54pt;text-align:justify;text-indent:-18pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">&#8226;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%;padding-left:14.5pt;text-decoration:underline">Receipt and payment of milestones are highly variable and unpredictable and obscures overall trends in the Company&#8217;s normal and recurring R&#38;D efforts and product revenues.</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> To date, milestone revenues and expenses have been based upon the achievement of unpredictable milestones, such as the results of clinical trials and attainment of regulatory review and approval. This precludes reliable prediction of the timing and amount of milestone revenues and expenses. In contrast, normal and recurring R&#38;D expenses relate to the Company&#8217;s planned scientific endeavors, and such expenses and product revenues are predictable in nature. Exclusion of milestones allows the Company to present meaningful and comparable financial information to investors.</font></div><div style="padding-left:18pt;text-align:justify"><font><br></font></div><div style="padding-left:54pt;text-align:justify;text-indent:-18pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">&#8226;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%;padding-left:14.5pt;text-decoration:underline">IPR&#38;D expenses differ from normal, recurring R&#38;D expenses and are distorting in their impact on R&#38;D expense trends</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">. Collaborative and licensing agreements are strategic, and the Company enters into such agreements to enhance its development and commercialization capabilities. Upon entering into such agreements, the Company may incur IPR&#38;D expenses, which consist of upfront payments made to acquire intangible assets in an asset acquisition for use in R&#38;D activities which have no alternative future use on the acquisition date. Because upfront payments are highly negotiated based on numerous factors, including the fair value of the rights conveyed, there is typically no clear or consistent relationship between the amount of the upfront payment and the normal and recurring R&#38;D expenses incurred under the associated collaboration arrangement. Such upfront payments are typically discrete, not tied to measurable events, and made at the onset of a relationship that may last many years.</font></div><div style="padding-left:18pt;text-align:justify"><font><br></font></div><div style="padding-left:54pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The magnitude of these transactions is unusual for the Company. For example, IPR&#38;D expenses that the Company adjusted for within its Non-GAAP Financial Measures for the twelve months ended December 31, 2018, 2019 and 2020 were approximately 3%, 44% and 37%, respectively, of the Company&#8217;s total GAAP R&#38;D expense for such periods. Exclusion of</font></div><div style="height:72pt;position:relative;width:100%"><div style="bottom:0;position:absolute;width:100%"><div style="text-align:center"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">4</font></div></div></div><hr style="page-break-after:always"><div style="min-height:72pt;width:100%"><div><font><br></font></div></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">United States Securities and Exchange Commission</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">October 5, 2021</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Page Five</font></div><div><font><br></font></div><div style="padding-left:54pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">these IPR&#38;D expenses allows for a clearer view of normal, recurring R&#38;D expense trends, which is relevant and useful to investors.</font></div><div><font><br></font></div><div style="padding-left:54pt;text-align:justify;text-indent:-18pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">&#8226;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%;padding-left:14.5pt;text-decoration:underline">Non-cash collaboration revenue is infrequent and distorting in its impact on revenue</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">. Non-cash collaboration revenue for the periods presented in the August 8-K is related to the Company&#8217;s collaboration with Mitsubishi Tanabe Pharma Corporation (</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">&#8220;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">MTPC</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">&#8221;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">). In March 2015, the Company entered into a collaboration and license agreement with MTPC, under which the Company out-licensed the development and commercialization rights for INGREZZA for movement disorders in Japan and other select Asian markets. Under the terms of the agreement, the Company received a $30.0 million upfront payment, of which $19.8 million, associated with the delivery of a technology license and existing know-how, was recognized as revenue upon entering the collaboration, and $10.2 million of revenue was deferred in connection with the Company&#8217;s continuing performance obligations under the collaboration. </font></div><div><font><br></font></div><div style="padding-left:54pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Since entering into the collaboration with MTPC in March 2015, the Company has shifted its business strategy from out-licensing certain of its internally developed compounds to focus on selectively acquiring rights to programs at all stages of development and commercial products to take advantage of its drug development and commercial capabilities. Given the non-cash nature of the amounts involved and the Company&#8217;s shift in business strategy, the Company believes adjusting for these amounts provides a more accurate measure of the Company's financial performance from direct business operations.</font></div><div style="text-align:justify;text-indent:54pt"><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Company does not believe the Non-GAAP Adjustments reflect normal, recurring revenues and expenses, as applicable, of its business or that such adjustments cause the presentation of its Non-GAAP Financial Measures to be misleading.</font></div><div><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;text-decoration:underline">Form 8-K filed February 4, 2021</font></div><div style="text-align:justify"><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;text-decoration:underline">Exhibit 99.1</font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;text-decoration:underline">Full Year 2021 Expense Guidance, page 3</font></div><div><font><br></font></div><div style="padding-left:36pt;text-align:justify;text-indent:-36pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">3.</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;padding-left:27.67pt">We note that your Combined GAAP R&#38;D and SG&#38;A expenses do not include any potential milestones or in-process research and development costs associated with current collaborations or future business development activities. Given that these costs should not be excluded from your GAAP measure, please address the appropriateness of this presentation. Refer Item 10(e)(1)(B) and tell us how you intend to revise your disclosures.</font></div><div style="text-align:justify;text-indent:-18pt"><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Response&#58;</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> The Company acknowledges the Staff&#8217;s comment and respectfully advises the Staff that it excludes such potential costs due to their uncertainty as the Company cannot ascertain the probability of achieving certain future milestones or acquiring certain future rights through asset acquisitions by way of upfront payments.</font></div><div><font><br></font></div><div style="padding-left:36pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The completion of significant future collaboration and licensing arrangements and the associated upfront payments and milestones are highly variable and unpredictable. In addition, milestones associated with the Company&#8217;s significant collaboration and licensing arrangements are often dependent on future clinical development progress of a program and&#47;or subject to the achievement of regulatory review and approval. Accordingly, the probability of achievement</font></div><div style="height:72pt;position:relative;width:100%"><div style="bottom:0;position:absolute;width:100%"><div style="text-align:center"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">5</font></div></div></div><hr style="page-break-after:always"><div style="min-height:72pt;width:100%"><div><font><br></font></div></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">United States Securities and Exchange Commission</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">October 5, 2021</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Page Six</font></div><div><font><br></font></div><div style="padding-left:36pt;text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">cannot be readily determined prior to the achievement of such milestone event. These factors, among others, preclude reliable prediction of timing and amounts. Once significant collaboration and licensing arrangements have been completed or the associated milestones are probable of achievement or have been achieved, IPR&#38;D expenses and milestones are included in the Company&#8217;s Combined R&#38;D and SG&#38;A expense guidance.</font></div><div style="padding-left:36pt;text-align:justify"><font><br></font></div><div style="text-align:center"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">***</font></div><div style="text-align:center"><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Company further acknowledges that it is responsible for the accuracy and adequacy of its disclosures, notwithstanding any review, comments, action or absence of action by the Staff.</font></div><div style="text-align:justify"><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Please contact me at (858) 617-7642 with any questions or further comments regarding the Company&#8217;s responses to the Staff&#8217;s comments.</font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Sincerely, </font></div><div><font><br></font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">&#47;s&#47; Matthew Abernethy</font></div><div><font><br></font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Matthew Abernethy</font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Chief Financial Officer</font></div><div><font><br></font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">cc&#58; Darin Lippoldt, Chief Legal Officer </font></div><div style="padding-left:14.4pt"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Jason L. Kent, Cooley LLP</font></div><div style="height:72pt;position:relative;width:100%"><div style="bottom:0;position:absolute;width:100%"><div style="text-align:center"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">6</font></div></div></div><hr style="page-break-after:always"><div style="min-height:72pt;width:100%"><div><font><br></font></div></div><div style="text-align:center"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%;text-decoration:underline">Exhibit A</font></div><div><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Research and Development, or R&#38;D.</font></div><div><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">We support our drug discovery and development efforts through the commitment of significant resources to discovery, R&#38;D programs, and business development opportunities. We categorize R&#38;D program-related expenses by development stage based upon the program status when the expense is incurred. Therefore, the same program could be reflected in different development stages in the same reporting period. R&#38;D activities for several of our programs are part of our collaborative and other relationships. For each of our R&#38;D programs, we incur both external and internal expenses. External development expenses consist of costs in the Late, Early and Research and Discovery development stages and include costs incurred for clinical and non&#8209;clinical activities (such as those performed by contract research organizations and collaboration partners), scientific consulting fees, laboratory services, purchases of clinical trial drug product materials and third&#8209;party manufacturing development costs. We do not allocate milestone expenses to allow for a clearer view of normal, recurring R&#38;D expense trends. Internal R&#38;D expenses consist of payroll and benefits expenses, facilities expense, and other indirect R&#38;D expenses incurred in support of overall R&#38;D activities and as such are not allocated to a specific development stage.</font></div><div><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">R&#38;D expense categories consist of the following&#58;</font></div><div><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Late Stage.</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> Consist of external costs incurred for product candidates in Phase II registrational studies and onwards. </font></div><div><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Early Stage.</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> Consist of external costs incurred for product candidates post-investigational new drug application through Phase II non-registrational studies. </font></div><div><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Research and Discovery.</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> Consist of external costs incurred pre-investigational new drug application. </font></div><div><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Milestone Expenses</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">. Consist of development and&#47;or regulatory milestone expenses incurred in connection with our collaborative and other arrangements.</font></div><div><font><br></font></div><div style="text-align:justify"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Payroll and Benefits.</font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> Consist of costs incurred for salaries and wages, payroll taxes, benefits and share-based compensation associated with employees involved in R&#38;D activities. Share-based compensation may fluctuate from period to period based on factors that are not within our control, such as our stock price on the dates share-based grants are issued. </font></div><div><font><br></font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Facilities and Other. </font><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Consist of indirect costs incurred for the benefit of multiple programs, including management costs, depreciation, information technology and facility-based expenses.</font></div><div><font><br></font></div><div><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The following table presents R&#38;D expense by category&#58;</font></div><div><table style="border-collapse:collapse;display:inline-table;margin-bottom:5pt;vertical-align:text-bottom;width:100.000%"><tr><td style="width:1.0%"></td><td style="width:55.470%"></td><td style="width:0.1%"></td><td style="width:1.0%"></td><td style="width:12.842%"></td><td style="width:0.1%"></td><td style="width:0.1%"></td><td style="width:0.601%"></td><td style="width:0.1%"></td><td style="width:1.0%"></td><td style="width:12.842%"></td><td style="width:0.1%"></td><td style="width:0.1%"></td><td style="width:0.601%"></td><td style="width:0.1%"></td><td style="width:1.0%"></td><td style="width:12.844%"></td><td style="width:0.1%"></td></tr><tr><td colspan="3" style="padding:2px 1pt;text-align:center;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:8pt;font-weight:700;line-height:100%">&#160;</font></td><td colspan="15" style="padding:2px 1pt;text-align:center;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:8pt;font-weight:700;line-height:100%">Year Ended December 31,</font></td></tr><tr><td colspan="3" style="padding:2px 1pt;text-align:left;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:8pt;font-style:italic;font-weight:700;line-height:100%">(in millions)</font></td><td colspan="3" style="border-top:1pt solid #000;padding:2px 1pt;text-align:center;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:8pt;font-weight:700;line-height:100%">2020</font></td><td colspan="3" style="border-top:1pt solid #000;padding:0 1pt"></td><td colspan="3" style="border-top:1pt solid #000;padding:2px 1pt;text-align:center;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:8pt;font-weight:700;line-height:100%">2019</font></td><td colspan="3" style="border-top:1pt solid #000;padding:0 1pt"></td><td colspan="3" style="border-top:1pt solid #000;padding:2px 1pt;text-align:center;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:8pt;font-weight:700;line-height:100%">2018</font></td></tr><tr><td colspan="3" style="background-color:#cff0fc;padding:2px 1pt;text-align:left;vertical-align:top"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">Late stage</font></td><td style="background-color:#cff0fc;border-top:1pt solid #000;padding:2px 0 2px 1pt;text-align:left;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">$</font></td><td style="background-color:#cff0fc;border-top:1pt solid #000;padding:2px 0;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">55.1&#160;</font></td><td style="background-color:#cff0fc;border-top:1pt solid #000;padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="background-color:#cff0fc;padding:0 1pt"></td><td style="background-color:#cff0fc;border-top:1pt solid #000000;padding:2px 0 2px 1pt;text-align:left;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">$</font></td><td style="background-color:#cff0fc;border-top:1pt solid #000000;padding:2px 0;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">43.7&#160;</font></td><td style="background-color:#cff0fc;border-top:1pt solid #000000;padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="background-color:#cff0fc;padding:0 1pt"></td><td style="background-color:#cff0fc;border-top:1pt solid #000000;padding:2px 0 2px 1pt;text-align:left;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">$</font></td><td style="background-color:#cff0fc;border-top:1pt solid #000000;padding:2px 0;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">14.2&#160;</font></td><td style="background-color:#cff0fc;border-top:1pt solid #000000;padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td></tr><tr><td colspan="3" style="padding:2px 1pt;text-align:left;vertical-align:top"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">Early stage</font></td><td colspan="2" style="padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">30.2&#160;</font></td><td style="padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="padding:0 1pt"></td><td colspan="2" style="padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">25.3&#160;</font></td><td style="padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="padding:0 1pt"></td><td colspan="2" style="padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">41.7&#160;</font></td><td style="padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td></tr><tr><td colspan="3" style="background-color:#cff0fc;padding:2px 1pt;text-align:left;vertical-align:top"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">Research and discovery</font></td><td colspan="2" style="background-color:#cff0fc;padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">43.3&#160;</font></td><td style="background-color:#cff0fc;padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="background-color:#cff0fc;padding:0 1pt"></td><td colspan="2" style="background-color:#cff0fc;padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">24.6&#160;</font></td><td style="background-color:#cff0fc;padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="background-color:#cff0fc;padding:0 1pt"></td><td colspan="2" style="background-color:#cff0fc;padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">17.0&#160;</font></td><td style="background-color:#cff0fc;padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td></tr><tr><td colspan="3" style="padding:2px 1pt;text-align:left;vertical-align:top"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">Milestone payments</font></td><td colspan="2" style="padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">20.0&#160;</font></td><td style="padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="padding:0 1pt"></td><td colspan="2" style="padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">10.0&#160;</font></td><td style="padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="padding:0 1pt"></td><td colspan="2" style="padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">10.0&#160;</font></td><td style="padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td></tr><tr><td colspan="3" style="background-color:#cff0fc;padding:2px 1pt;text-align:left;vertical-align:top"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">Payroll and benefits</font></td><td colspan="2" style="background-color:#cff0fc;padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">95.4&#160;</font></td><td style="background-color:#cff0fc;padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="background-color:#cff0fc;padding:0 1pt"></td><td colspan="2" style="background-color:#cff0fc;padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">71.3&#160;</font></td><td style="background-color:#cff0fc;padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="background-color:#cff0fc;padding:0 1pt"></td><td colspan="2" style="background-color:#cff0fc;padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">62.0&#160;</font></td><td style="background-color:#cff0fc;padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td></tr><tr><td colspan="3" style="padding:2px 1pt;text-align:left;vertical-align:top"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">Facilities and other</font></td><td colspan="2" style="padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">31.0&#160;</font></td><td style="padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="padding:0 1pt"></td><td colspan="2" style="padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">25.1&#160;</font></td><td style="padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="padding:0 1pt"></td><td colspan="2" style="padding:2px 0 2px 1pt;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">10.9&#160;</font></td><td style="padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td></tr><tr><td colspan="3" style="background-color:#cff0fc;padding:2px 1pt;text-align:left;vertical-align:top"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">Total R&#38;D expense</font></td><td style="background-color:#cff0fc;border-bottom:3pt double #000000;border-top:1pt solid #000000;padding:2px 0 2px 1pt;text-align:left;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">$</font></td><td style="background-color:#cff0fc;border-bottom:3pt double #000000;border-top:1pt solid #000000;padding:2px 0;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">275.0&#160;</font></td><td style="background-color:#cff0fc;border-bottom:3pt double #000000;border-top:1pt solid #000000;padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="background-color:#cff0fc;padding:0 1pt"></td><td style="background-color:#cff0fc;border-bottom:3pt double #000000;border-top:1pt solid #000000;padding:2px 0 2px 1pt;text-align:left;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">$</font></td><td style="background-color:#cff0fc;border-bottom:3pt double #000000;border-top:1pt solid #000000;padding:2px 0;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">200.0&#160;</font></td><td style="background-color:#cff0fc;border-bottom:3pt double #000000;border-top:1pt solid #000000;padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td><td colspan="3" style="background-color:#cff0fc;padding:0 1pt"></td><td style="background-color:#cff0fc;border-bottom:3pt double #000000;border-top:1pt solid #000000;padding:2px 0 2px 1pt;text-align:left;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">$</font></td><td style="background-color:#cff0fc;border-bottom:3pt double #000000;border-top:1pt solid #000000;padding:2px 0;text-align:right;vertical-align:bottom"><font style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">155.8&#160;</font></td><td style="background-color:#cff0fc;border-bottom:3pt double #000000;border-top:1pt solid #000000;padding:2px 1pt 2px 0;text-align:right;vertical-align:bottom"></td></tr></table></div><div style="height:72pt;position:relative;width:100%"><div style="bottom:0;position:absolute;width:100%"><div><font><br></font></div></div></div></body></html>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
