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Deferred Revenue
3 Months Ended
Mar. 31, 2014
Deferred Revenue

11. Deferred Revenue

The following is a summary of changes in total deferred revenue for the three months ended March 31, 2014 and 2013:

 

     Three Months Ended  
(in thousands)    March 31
2014
     March 31
2013
 

Balance beginning of period

   $ 90,275       $ 117,064   

Licensing revenue recognized

     7,452         6,606   
  

 

 

    

 

 

 

Balance end of period

   $ 82,823       $ 110,458   
  

 

 

    

 

 

 

The Company entered into an amended and restated sublicense agreement with Novartis in 2009, pursuant to which Novartis has the right to commercialize and develop Fanapt® in the U.S. and Canada. Under the amended and restated sublicense agreement, the Company received an upfront payment of $200.0 million. The Company and Novartis established a Joint Steering Committee (JSC) following the effective date of the amended and restated sublicense agreement. The Company concluded that the JSC constitutes a deliverable under the amended and restated sublicense agreement and that revenue related to the upfront payment will be recognized ratably over the term of the JSC; however, the delivery or performance has no term as the exact length of the JSC is undefined. As a result, the Company deems the performance period of the JSC to be the life of the U.S. patent of Fanapt®. Revenue related to the upfront payment will be recognized ratably from the date the amended and restated sublicense agreement became effective (November 2009) through the expected life of the U.S. patent for Fanapt® (November 2016). See Note 9 Intangible Assets, for a discussion of the Fanapt® patent life.