REVENUE RECOGNITION

9 Months Ended

Sep. 30, 2022

REVENUE RECOGNITION.

REVENUE RECOGNITION

NOTE 2 REVENUE RECOGNITION

Gross-to-Net Sales Adjustments

To date, our only source of product revenue has been from the U.S. sales of UKONIQ, which we began shipping to our customers in February 2021. On April 15, 2022, we announced our voluntary withdrawal of UKONIQ from sale. Furthermore, on May 27, 2022, the Food and Drug Administration (FDA) issued a notice in the Federal Register officially withdrawing approval of the New Drug Application (NDA) for UKONIQ, effective May 31, 2022. This notice required stopping all distribution of UKONIQ and the return of all remaining inventory from the Company’s customers as soon as possible. We record our best estimate for sales discounts and allowances to which customers are likely to be entitled. The reconciliation of gross product sales to net product sales by each significant category of gross-to-net adjustments was as follows for the three and nine months ended September 30, 2022 and 2021:

(in thousands)	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2022		2021		2022		2021
Gross product revenue	$	-	$	2,528	$	4,119	$	5,167
Gross-to-net adjustments:
Chargebacks and administrative fees		(4)		(292)		(376)		(487)
Trade discounts and allowances		7		(128)		(182)		(222)
Government rebates and co-payment assistance		3		(103)		(279)		(179)
Sales returns and allowances		50		(13)		(691)		(25)
Total gross-to-net adjustments(1)	$	56	$	(536)	$	(1,528)	$	(913)
Net product revenue	$	56	$	1,992	$	2,591	$	4,254

⁽¹⁾ As of September 30, 2022 approximately $0.3 million of estimated gross-to-net accruals have been recorded as a reduction of accounts receivable, net and within accounts payable and accrued expenses on the condensed consolidated balance sheets.