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United States securities and exchange commission logo
March 17, 2021
Josh Bayliss
Chief Executive Officer
VG Acquisition Corp.
65 Bleecker Street, 6th Floor
New York, NY 10012
Re: VG Acquisition
Corp.
Draft Registration
Statement on Form S-4
Submitted February
16, 2021
CIK 0001804591
Dear Mr. Bayliss:
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 registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1, Submitted February 16, 2021
What are the U.S. federal income tax consequences of the Domestication
Proposal?, page xv
1. Your statement that the
Domestication "should" constitute a tax-free reorganization within
the meaning of Section
368(a)(1)(F) appears to convey doubt or uncertainty about the tax
treatment. Please
revise your disclosure here and in your disclosure beginning on page
137 to explain why you
are unable to provide a "will" opinion and to clarify that the
opinion is subject to a
degree of uncertainly. Similarly address your statement on page
xxi indicating that
redemption exercises "may" be treated as selling ordinary shares or
common stock, resulting
in the recognition of capital gain or capital loss. Additionally,
file a tax opinion as
required by Item 601(b)(8) of Regulation S-K.
Do any of 23andMe's directors or officers have interests in the Merger
that may differ from or be
Josh Bayliss
FirstName LastNameJosh Bayliss
VG Acquisition Corp.
Comapany
March NameVG Acquisition Corp.
17, 2021
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in addition ...?, page xxx
2. Briefly identify these conflicts of interest.
Summary of the Proxy Statement/Consent Solicitation/Prospectus, page 1
3. On page 1 you state: 23andMe was the first company to obtain Food
and Drug
Administration ( FDA ) authorization for a direct-to-consumer
genetic test, and is the
only company to have FDA authorization, clearance, or pre-market
exemption for all of its
carrier status, genetic health risk, cancer predisposition, and
pharmacogenetics reports.
Please revise to clarify this statement by defining the testing types
referenced and
explaining the comparison being made to your competitors, including by
stating, as you
do on page 23, that other companies have since received FDA
authorization, clearance or
pre-market exemption for at least certain of their genetic and health
risk reports.
4. We note your statement on page 13 that the Sponsor owns approximately
20% of the
issued and outstanding ordinary shares. Please revise page 13 to state
the voting power
held by the Sponsor and resulting requisite vote for remaining VGAC
stockholders for
each proposal. Please also revise to state the total ownership and
voting power of the
Virgin Group and its affiliates, including VGAC, after the Business
Combination, given
that the Virgin Group is an existing 23andMe stockholder.
Ownership of New 23and Me hold in New 23andMe, page 8
5. Please include a similar question and applicable table depicting the
voting power of
VGAC shareholders, VGAC sponsor, PIPE Investors, 23andMe Class A
shareholders and
Class B shareholders in New 23andMe assuming no redemptions and
maximum
redemptions.
Ongoing litigation could have a significant negative impact on 23andMe, page 36
6. Please revise page 36 to state the amount at issue in the Celmatix
litigation.
Risk Factors
23andMe's ability to use its net operating loss and research and development
credit
carryforwards..., page 37
7. We note your statement that it is likely that the Business Combination
would result in an
ownership change and if an ownership change is deemed to have
occurred, 23andMe's
carryforwards may be limited. Please revise to explain how the
limitation on the use of
carryforwards is determined if there is an ownership change.
Business Combination Proposal
The Merger Agreement, page 83
8. Please revise page 84 to state how the Share Conversion Ratio is
calculated and quantify
the value of the Share Conversion Ratio that is being used as the
assumed value
Josh Bayliss
FirstName LastNameJosh Bayliss
VG Acquisition Corp.
Comapany
March NameVG Acquisition Corp.
17, 2021
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throughout the registration statement.
9. Please identify the closing conditions that are subject to waiver.
10. Please revise your disclosure to reflect the no shop provision
included as Section 9.10 in
the Merger Agreement.
Related Agreements, page 86
11. Please revise page 86 and elsewhere to specify the registration rights
awarded to the PIPE
Investors and whether they are distinct from those granted under the
Amended and
Restated Registration Rights Agreement. Please also specify the number
of shares covered
under the Amended and Restated Registration Rights Agreement.
Background to the Business Combination, page 87
12. Please provide a more detailed description of the process used in
eliminating potential
business combination candidates as you progressed from 728 candidates
to 23 candidates.
How many candidates were still under consideration on October 15, 2020
when you
discussed the range of potential targets with LionTree?
13. Please revise page 88 to provide more detail concerning the entities
that you were in
meaningful and detailed discussions with, including whether any
companies entered a
confidentiality agreement or letter of intent, their industries, size
and why discussions
ended on a company-by-company basis.
Summary of VGAC Financial Analysis, page 98
14. Please provide more detail concerning the pro forma enterprise value
in your internal
valuation analysis and how it was calculated, as well as additional
detail concerning the
qualitative aspect of your analysis, such as whether operating history
or, with respect to
therapeutics companies, clinical stage, was considered. Please expand
the disclosure to
state the selection criteria used to determine the companies used in
the analyses. Disclose
whether any companies meeting the selection criteria were excluded
from the analyses
and, if so, explain why. Please also provide the corresponding date
for the data
underlying these comparative market cap and enterprise value
calculations.
Certain Company Projected Financial Information, page 99
15. Please revise to disclose the financial projections used and discuss
all material
assumptions used to develop the financial projections used, including
the growth rate of
23andMe's PGS business.
Charter Amendment Proposal, page 108
16. We note that the Charter Amendment Proposal is separate from the
Governing Documents
Proposal even though these proposals overlap. Please explain why these
are separate
proposals and revise to explain how these proposals interact. For
instance, explain the
Josh Bayliss
FirstName LastNameJosh Bayliss
VG Acquisition Corp.
Comapany
March NameVG Acquisition Corp.
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effect if one or more of the Governing Documents Proposals were not
approved but the
Charter Amendment Proposal was approved.
Governing Documents Proposal C - Approval of Other Changes in Connection with
Adoption of
the Proposed Governing Documents, page 116
17. We note that Governing Documents Proposal C is seeking stockholder
approval of other
changes necessary or, as mutually agreed in good faith by VGAC and
23andMe, desirable
in connection with the replacement of the Existing Governing Documents
with the
Proposed Certificate of Incorporation and Proposed Bylaws as part of
the Domestication,
including electing not to be governed by Section 203 of the DGCL and
adopting Delaware
as the exclusive forum for certain stockholder litigation. Please
provide your analysis as to
why you are not required to unbundle the various material provisions
to the proposed
changes to your certificate of incorporation. Additionally, on page
117 you state that
certain material changes between the Existing Governing Documents
and the Proposed
Governing Documents have been unbundled into distinct Governing
Documents
Proposals. Please ensure all material differences are presented as
separate proposals to be
voted upon. Please refer to Rule 14a-4(a)(3) of Regulation 14A and the
Compliance and
Disclosure Interpretations relating to Rule 14a-4(a)(3), which is
available on our website.
18. We note that your forum selection provision identifies the Court of
Chancery of the State
of Delaware as the exclusive forum for certain litigation, including
any derivative
action, and that the federal district courts of the United States
will be the sole and
exclusive forum for resolving any action asserting a claim arising
under the Securities
Act. Please disclose whether this provision applies to actions arising
under the Exchange
Act. Please also ensure that the exclusive forum provision in the
governing documents
clearly states whether it is applicable to actions arising under the
Securities Act or
Exchange Act, or tell us how you will inform investors in future
filings that the provision
does not apply to any actions arising under the Securities Act or
Exchange Act.
Information about 23andMe
Overview, page 174
19. Please revise the description of the GSK Agreement on page 179 to
provide the following:
nature and scope of intellectual property rights of each party,
including post-
termination rights with respect to any of the 30 drug targets
jointly identified;
duration of any royalty term;
royalty rates, royalty range or how the rate will be determined;
any amounts paid or received to date;
how potential milestone payments will be determined; and
termination provisions.
Please also file such agreement as an exhibit pursuant to Item
601(b)(10) of Regulation S-
K or tell us how you have determined it is not a required exhibit.
20. On page 183 you state that the insights from the 23andMe GWAS and
PheWAS translate
Josh Bayliss
FirstName LastNameJosh Bayliss
VG Acquisition Corp.
Comapany
March NameVG Acquisition Corp.
17, 2021
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FirstName LastName
into thousands of potential drug targets, the statement appears highly
speculative. Please
remove it or provide further explanation.
Our Market Opportunity, page 184
21. Please eliminate the graphic and related statements indicating that
you will cut the time to
IND from an average of 7 years to 4 years and that your approach will
double the
probability of success. The statements are speculative and it is not
appropriate to indicate
your product candidates have a higher probability of success.
22. Please revise page 188 to describe the graphic shown, including
whether these conditions
are conditions reported by your customers or potential genetic
conditions reported by your
tests. With respect to the p-value mentioned, please revise to state
the meaning of p-values
in this context.
23. Please also provide more specificity around the multiple
preclinical programs in your
pipeline table to identify the target indications or disclose that due
to the early stage of
development you have not yet identified indications.
24. Please revise your graphic and surrounding text on pages 190 and 221
to delete references
to the number of validated targets for 2021-2024. This information is
speculative and
inappropriately assumes successful preclinical trials.
Intellectual Property, page 193
25. Please revise page 193 to provide (i) the specific products, product
groups and
technologies to which such patents relate; (ii) whether the patents
are owned or licensed;
(iii) the type of patent protection and (iv) the specific
jurisdictions covered.
Results of Operations, page 224
26. Please revise to provide more robust discussion of changes in your
results of operations.
For example, you disclose that revenues decreased because of a
reduction in the volume of
PGS kit sales resulting from reductions in promotional activities.
Please revise to explain
the reasons for the reduction in promotional activities. In addition,
please consider
providing disclosures related to expectations for future periods.
Research and Development Expenses, page 225
27. Please expand to provide a break-out of the nature of the expenses and
by key projects for
your research and development expenses incurred during each period
presented.
Adjusted EBITDA , page 226
28. We note on page F-7 that you recognized $12.6 million of impairment
related to
your ROU assets associated with your operating lease in Sunnyvale,
California, as a result
of foreseeable future sublease rental income reduced and delayed by
COVID 19 during
fiscal 2020 and that you have classified this within your
restructuring expense. We further
Josh Bayliss
FirstName LastNameJosh Bayliss
VG Acquisition Corp.
Comapany
March NameVG Acquisition Corp.
17, 2021
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note that you present consolidated Adjusted EBITDA and that this
expense is a
component of the restructuring line item within the GAAP to non-GAAP
reconciliation.
Please revise your filing to clearly disclose this amount and to
describe the nature of these
impairment expenses and how you were able to determine this expense is
incremental to
your normal operations and nonrecurring. Refer to Item 10(e) of
Regulation S-K and
Question 100.1 of the Non-GAAP Financial Measures Compliance and
Disclosures
Interpretations.
Revenue Recognition, page 231
29. We note your disclosure regarding breakage revenue and the materiality
of the amounts
for the past two years. Please tell us the impact to total revenues
and earnings if your
estimate of unreturned kits is not materially accurate.
Beneficial Ownership of Securities, page 253
30. Please provide the beneficial ownership disclosure of 23andMe prior to
consummation of
the Business Combination. Refer to Item 6(d) of Schedule 14A and Item
403 of
Regulation S-K.
31. Please revise your disclosure to identify the natural person or
persons who have voting
and/or investment control of the shares held by ABeeC 2.0, LLC,
NewView Capital Fund
I, L.P. and the entities affiliated with G Squared Equity Management
LP on page 256.
Refer to Item 403 of Regulation S-K required by Item 6 of Schedule
14A.
Where You Can Find More Information; Incorporation by Reference, page 287
32. Please remove the incorporation by reference language regarding any
additional
documents that you may file with the SEC pursuant to Section 13(a),
13(c), 14 or 15(d) of
the Exchange Act prior to the general meeting, as it appears you are
not eligible for
incorporation by reference pursuant to Form S-4. Please revise the S-4
to include any
required information from Exchange Act filings.
Index to Consolidated Financial Statements
Note 3. Collaborations, page F-21
33. We note that you determined the initial transaction price under the
GlaxoSmithKline plc
agreement to be $127.3 million. Please tell us and revise your filing
to explain in more
detail how you determined the initial transaction price.
Exhibits
34. Please file the employment agreements with Steven Schoch, Fred Kohler,
Kathy Hibbs
and Steve Lemon as exhibits pursuant to Item 601(b)(10) of Regulation
S-K.
General
Josh Bayliss
VG Acquisition Corp.
March 17, 2021
Page 7
35. Please provide us with copies of the materials that your financial
advisors prepared and
shared with your board in connection with this transaction, including
any board books,
transcripts and summaries of oral presentations made to the board. We
may have
additional comments after we review those materials.
36. We note much of the required disclosure is currently missing and you
have indicated it
will be provided in a subsequent filing. Please note we will defer our
review if the
information is not provided in your next filing.
You may contact Tara Harkins at 202-5513639 or Dan Gordon at
202-551-3486 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Margaret Schwartz at 202-551-7153 or Suzanne Hayes at 202-551-3675 with
any other
questions.
FirstName LastNameJosh Bayliss Sincerely,
Comapany NameVG Acquisition Corp.
Division of
Corporation Finance
March 17, 2021 Page 7 Office of Life
Sciences
FirstName LastName