REVENUE

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Disaggregated Revenue

The following table summarizes revenue from contracts with customers for the three months ended March 31, 2020 and 2019 (in thousands):



	Three Months Ended March 31,
	2020		2019
Product sales, net
CAMBIA	$	6,274	$	8,808
Zipsor	2,331		4,231
Gralise	547		13,278
Total neurology product sales, net	9,152		26,317
NUCYNTA and Lazanda product sales adjustments	100		133
Total product sales, net	9,252		26,450
Commercialization agreement, net	11,258		30,856
Royalties and milestone revenue	407		623
Total revenues	$	20,917	$	57,929

Product Sales

For the three months ended March 31, 2020, neurology product sales consisted primarily of sales from CAMBIA and Zipsor. The Company completed the sale of Gralise to Alvogen on January 10, 2020, and therefore ceased recognizing product sales related to Gralise effective the transaction close date.

The Company ceased recognizing product sales related to NUCYNTA in January 2018 as discussed below under Commercialization Agreement. The Company divested and ceased recognizing product sales related to Lazanda in November 2017. Product sales related to NUCYNTA and Lazanda during the three months ended March 31, 2020 and 2019 relate to sales reserve estimate adjustments related to sales recognized in prior periods.

Commercialization Agreement

In December 2017, the Company and Collegium entered into the Commercialization Agreement (Commercialization Agreement), pursuant to which the Company granted Collegium the right to commercialize the NUCYNTA franchise of pain products in the U.S. Pursuant to the Commercialization Agreement, Collegium assumed all commercialization responsibilities for the NUCYNTA franchise effective January 9, 2018, including sales and marketing. In November 2018 the Company entered into an amendment to the Commercialization Agreement (Commercialization Amendment). Prior to the November 2018 amendment, the consideration related to the license and facilitation services was fixed and recognized ratably over the contract term. Following the November 2018 amendment, the royalty payments represented variable consideration that are subject to the sales-based royalty exception for licenses of intellectual property and are recognized at the later of (i) when the subsequent product sales occur or (ii) the performance obligation, to which some or all of the sales-based royalty has been allocated, has been satisfied.

Effective as of February 13, 2020, the Company divested its rights, title and interest in and to its NUCYNTA franchise of products in the U.S. to Collegium. In connection with the sale, the Commercialization Agreement terminated at closing with certain specified provisions of the Commercialization Agreement surviving in accordance with the terms of the purchase agreement.

For the three months ended March 31, 2020, the Company recognized net revenue from the Commercialization Agreement of $11.3 million. This included variable royalty revenue for the three months ended March 31, 2020 of $13.1 million offset by the amortization of the $1.8 million net contract asset in connection with the termination of the Commercialization Agreement as a result of the divestiture of NUCYNTA to Collegium.

During the three ended March 31, 2019, the Company recognized $1.0 million of net expense related to the third-party royalties which were paid by Collegium on behalf of Assertio. Collegium paid the full royalty owed to the third-party in 2019 and such amounts, over the course of the calendar year, had no net impact to the Company’s Consolidated Statement of Comprehensive Income.

Contract Assets

The following table presents changes in the Company’s contract assets as of March 31, 2020 (in thousands):



	Balance as of				Balance as of
	December 31, 2019	Additions	Deductions		March 31, 2020
Contract asset - Collegium, net	1,896	—	(1,896	)	—

The Collegium contract asset, net represented the conditional right to consideration for completed performance under the Commercialization Agreement arising from the transfer of inventory to Collegium on the date of closing of the agreement in January 2018 net of the contract liability of $10.0 million resulting from the upfront payment received and the $8.8 million of warrants received in connection with the Commercialization Amendment. In connection with the divestiture of NUCYNTA to Collegium the Company amortized the remaining balance of the contract asset in the first quarter of 2020.

Royalties & Milestones

In November 2010, we entered into a license agreement with Tribute Pharmaceuticals Canada Ltd. (now Nuvo Pharmaceuticals, Inc.) granting them the rights to commercially market CAMBIA in Canada. Nuvo independently contracts with manufacturers to produce a specific CAMBIA formulation in Canada. We receive royalties on net sales on a quarterly basis as well as certain one-time contingent milestone payments upon the occurrence of certain events. During the three months ended March 31, 2020 and 2019, we recognized $0.4 million and $0.6 million of revenue related to CAMBIA in Canada, respectively.