Collaboration, Licensing and Other Arrangements (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
|---|
| Schedule of Revenue from Collaboration and Services |
Revenue from collaborations and services for the years ended December 31, 2022, 2021 and 2020 are as follows (in thousands):
|
|
|
Year Ended December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
UT CSA Agreement (1) |
|
$ |
24,826 |
|
|
$ |
267 |
|
|
$ |
— |
|
|
UT License Agreement (2) |
|
|
2,426 |
|
|
|
34,145 |
|
|
|
32,213 |
|
|
Vertice Pharma Co-Promotion Agreement |
|
|
325 |
|
|
|
1,147 |
|
|
|
— |
|
|
Other |
|
|
200 |
|
|
|
323 |
|
|
|
— |
|
|
Cipla License and Distribution Agreement |
|
|
147 |
|
|
|
147 |
|
|
|
147 |
|
|
Receptor CLA |
|
|
— |
|
|
|
245 |
|
|
|
250 |
|
|
UT Research Agreement |
|
|
— |
|
|
|
— |
|
|
|
210 |
|
|
Total revenue from collaborations and services |
|
$ |
27,924 |
|
|
$ |
36,274 |
|
|
$ |
32,820 |
|
_________________________
|
(1) |
Amount consists of revenue recognized for Manufacturing Services and sales of product to UT for the periods presented. |
|
(2) |
Amount consists of revenue recognized for Next-Gen R&D Services and R&D Services and License for the periods presented. |
|
| Schedule of Deferred Revenue Related to Revenue Recognized for Collaborations and Services |
The activity related to deferred revenue and the related revenue recognized for collaborations and services is as follows (in thousands):
|
|
|
December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
Deferred revenue: |
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|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
20,370 |
|
|
$ |
34,937 |
|
|
Additions |
|
|
46,971 |
|
|
|
21,707 |
|
|
Revenue — collaborations and services |
|
|
(27,924 |
) |
|
|
(36,274 |
) |
|
Ending balance |
|
$ |
39,417 |
|
|
$ |
20,370 |
|
|
| Schedule of Revenue Allocation, Remaining Performance Obligation, Expected Timing of Satisfaction |
Revenue was allocated as follows:
|
Distinct Performance Obligation |
|
Transaction Price |
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|
Allocation of Price |
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|
Recognition Method |
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Progress Measure |
|
Recognition Period |
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|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
R&D Services and License |
|
$ |
105.8 |
|
|
100% |
|
|
Over time |
|
Ratably |
|
Sep 2018 - Dec 2021 |
(1) |
_________________________
|
(1) |
Recognition period represents the estimated period to satisfy the performance obligation. |
|
Description |
|
Transaction Price |
|
|
Allocation of Price(1) |
|
|
Recognition Method |
|
Progress Measure |
|
Revenue
Recognition |
|
|
|
|
(in millions) |
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|
|
|
|
|
|
|
|
Total transaction price |
|
$ |
50.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Distinct Performance Obligation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R&D Services and License |
|
|
|
|
|
$ |
18.4 |
|
|
Over time |
|
Ratably |
|
May 2021 - Oct 2021 |
(2) |
|
Pre-Commercial Services |
|
|
|
|
|
$ |
4.6 |
|
|
Over time |
|
Input |
|
% of completion of costs |
(3) |
|
Next-Gen R&D Services |
|
|
|
|
|
$ |
7.2 |
|
|
Over time |
|
Input |
|
% of completion of costs |
(3) |
|
Facility Expansion Services(4) |
|
|
|
|
|
$ |
20.7 |
|
|
Point in time |
|
|
|
Transfer of control |
(5) |
|
|
_________________________
|
(1) |
Allocation is based on management’s assessment of the stand-alone selling price of each performance obligation. |
|
(2) |
Represents the estimated period when the R&D Services performance obligation will be substantially complete. |
|
(3) |
Pre-Commercial Services and Next-Gen R&D Services performance obligations will be satisfied over time using the input method based on the costs incurred to date as a percentage of the total estimated costs to fulfill the contract. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. |
|
(4) |
The Company also acts as agent for the procurement of equipment for the manufacturing expansion for the UT Equipment. The Company received $5.0 million from UT for the UT Equipment, which was recognized as deposits from customer on the consolidated balance sheet and will be released as the title is transferred to UT. |
|
(5) |
The Facility Expansion Services performance obligation would be recognized as control of manufactured products is transferred to the customer. |
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| Schedule of Revised Anticipated Cash Flows from Transactions Allocated Performance Obligations |
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|
Anticipated |
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|
|
|
|
|
|
|
|
Description |
|
Cash Flow |
|
|
Revenue Allocation(1) |
|
|
Recognition Method |
|
Progress Measure |
|
Revenue
Recognition |
|
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
Total anticipated cash flow |
|
$ |
221.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Distinct Performance Obligation |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R&D Services and License(2) |
|
|
|
|
|
$ |
6.0 |
|
|
Over time |
|
Ratably |
|
Aug 2021 - Oct 2021 |
(3) |
|
Next-Gen R&D Services |
|
|
|
|
|
$ |
8.8 |
|
|
Over time |
|
Input |
|
% of completion of costs |
(4) |
|
Manufacturing Services |
|
|
|
|
|
$ |
206.7 |
|
|
Point in time |
|
|
|
Transfer of control |
(5) |
_________________________
|
(1) |
Allocation is based on management’s assessment of the stand-alone selling price of each performance obligation. |
|
(2) |
The license for the Company’s IP was considered to be interdependent with the development activities to support approval of Tyvaso DPI. A sales-based royalty is promised in exchange for the IP license; therefore, the royalties associated with the license are excluded from the determination of the transaction price and the Company will recognize revenue as the sale of Tyvaso DPI to a patient occurs. |
|
(3) |
Represents the estimated period when the R&D Services performance obligation will be substantially complete. |
|
(4) |
The Next-Gen R&D Services performance obligation will be satisfied over time using the input method based on the costs incurred to date as a percentage of the total estimated costs to fulfill the contract. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. |
|
(5) |
The Manufacturing Services performance obligation will be recognized as control of manufactured products is transferred to the customer; therefore, no revenue associated with this obligation was recognized during the year ended December 31, 2021. The allocation of transaction price includes a material right related to manufacturing services. The total anticipated cash flow is based on the Company’s estimated production and the ultimate cash flows may vary as manufacturing purchase orders are received. |
|
| Schedule of Effect of Modification on Transaction Price |
The Company accounted for the contract modification as if it were part of the existing contract since the amendment modified the scope and price of the CSA by extending the term and increasing the occupancy rate. The effect of the modification on the transaction price and on the measure of progress is recognized as an adjustment to revenue as of the date of the modification. The modification did not result in a change the activities and deliverables under the CSA. The total revised anticipated cash flows of $463.5 million from the transaction was allocated to the three distinct performance obligations as follows.
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|
Anticipated |
|
|
|
|
|
|
|
|
|
Description |
|
Cash Flow |
|
|
Revenue Allocation(1) |
|
|
Recognition Method |
|
Progress Measure |
|
Revenue
Recognition |
|
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
Total anticipated cash flow(2) |
|
$ |
463.5 |
|
|
|
|
|
|
|
|
|
|
|
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|
Distinct Performance Obligation |
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|
|
|
|
|
|
|
|
|
|
|
|
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|
R&D Services and License(3) |
|
|
|
|
|
$ |
— |
|
|
Over time |
|
Ratably |
|
Aug 2021 - Oct 2021 |
(4) |
|
Next-Gen R&D Services(5) |
|
|
|
|
|
$ |
4.8 |
|
|
Over time |
|
Input |
|
% of completion of costs |
(6) |
|
Manufacturing Services(7) |
|
|
|
|
|
$ |
458.7 |
|
|
Point in time |
|
|
|
Transfer of control |
(8) |
_________________________
|
(1) |
Allocation is based on management’s assessment of the stand-alone selling price of each performance obligation. |
|
(2) |
The total anticipated cash flow includes a transaction price of $64.3 million for the contractual obligations under the CSA for the Manufacturing Services and the Next-Gen R&D Services performance obligations and $399.2 million for future supply of Tyvaso DPI over the remaining term of the CSA. |
|
(3) |
The license for the Company’s IP was considered to be interdependent with the development activities to support approval of Tyvaso DPI. A sales-based royalty is promised in exchange for the IP license; therefore, the royalties associated with the license are excluded from the determination of the transaction price and the Company will recognize revenue as the sale of Tyvaso DPI to a patient occurs. |
|
(4) |
Represents the period when the revenue for the R&D Services performance obligation was recognized. |
|
(5) |
The standalone selling price (“SSP”) for the Next-Gen R&D Services performance obligation was based on industry ratios as well as the Company’s historical R&D projects. The transaction price for the Next-Gen R&D Services was based on fixed consideration which was allocated between performance obligations as discussed in note (2) above. |
|
(6) |
The Next-Gen R&D Services performance obligation will be satisfied over time using the input method based on the costs incurred to date as a percentage of the total estimated costs to fulfill the contract. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. |
|
(7) |
Pre-production activities under the CSA, such as facility expansion services and certain other administrative services, were considered bundled services that are part of the Company’s Manufacturing Services performance obligation, given the nature of the Company’s contractual responsibilities and ASC 606 requirements. |
|
(8) |
The Manufacturing Services performance obligation will be recognized as control of manufactured products is transferred to the customer. The modification did not result in a cumulative catch-up adjustment as a result of the revenue being deferred for the performance obligations that were affected by the modification. The allocation of the transaction price for the Manufacturing Services includes a material right related to the Company’s estimated production of product in the amount of $144.5 million. The Company will sell product to UT under individual purchase orders, which represent distinct performance obligations. The total anticipated cash flow is based on the Company’s estimated production and the ultimate cash flows may vary as manufacturing purchase orders are received. |
|
| United Therapeutics Corporation |
|
| Schedule of Revenue from Collaboration and Services |
Revenue from UT for the years ended December 31, 2022, 2021 and 2020 are as follows (in thousands):
|
|
|
Year Ended December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
UT Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
UT CSA Agreement |
|
$ |
24,826 |
|
|
$ |
267 |
|
|
$ |
— |
|
|
UT License Agreement |
|
|
2,426 |
|
|
|
34,145 |
|
|
|
32,213 |
|
|
Royalties — Collaborations (1) |
|
|
15,599 |
|
|
|
— |
|
|
|
— |
|
|
Total revenue from UT |
|
$ |
42,851 |
|
|
$ |
34,412 |
|
|
$ |
32,213 |
|
_________________________
|
(1) |
Amount consists of royalties associated with the UT License Agreement. |
The current portion of contract assets related to the royalties is included in prepaid expense and other current assets in the consolidated balance sheets.
|