Product Revenue and Concentration of Credit Risks

9 Months Ended

Sep. 30, 2021

Disaggregation of Revenue [Abstract]

Product Revenue and Concentration of Credit Risks

Product Revenue and Concentration of Credit Risks

Net Product Sales

Fintepla is distributed in the U.S. through an exclusive arrangement with a specialty distributor, who is our customer. The specialty distributor subsequently resells our product through its related specialty pharmacy provider to patients and health care providers. Separately, we have or may enter into payment arrangements with various third-party payers including pharmacy benefit managers, private healthcare insurers and government healthcare programs who provide coverage and reimbursement for our products that have been proscribed to a patient.

We distribute Fintepla in Europe (currently, in Germany and France) through a third-party logistics provider (3PL) for distribution to pharmacies in those countries. The pharmacies are our customers, who subsequently resell our product directly to patients and health care providers.

For the three months ended September 30, 2021, total net product sales for Fintepla were $21.4 million and consisted of U.S. product sales of $18.4 million, with the remainder from sales in Europe. For the nine months ended September 30, 2021, total net product sales for Fintepla were $51.3 million and consisted of U.S. product sales of $45.3 million, with the remainder from sales in Europe. For the three and nine months ended September 30, 2020, total net product sales for Fintepla of $1.5 million were generated in the United States. Fintepla was approved by the FDA in June 2020 and the EMA in December 2020.

We record product revenue at the net sales price (transaction price), which includes estimates of consideration payable to our customers and third-party payers for which reserves are established and that result from government rebates, chargebacks, co-pay assistance, prompt-payment discounts and other allowances that are offered under arrangements between us, our customers, and third-party payers related to the sales of Fintepla.

The following table summarizes the provisions, and credits/payments, for sales-related deductions.

(In thousands)	Rebates		Trade Discounts, Distributor Fees and Other		Total
Balance at December 31, 2020	$	1,161	$	129	$	1,290
Current period provisions	7,134		1,903		9,037
Payments/credits	(4,402)		(1,773)		(6,175)
Balance at September 30, 2021	$	3,893	$	259	$	4,152

We generally invoice our customers and recognize revenue once our performance obligations are satisfied, at which point payment is unconditional. Accordingly, our arrangements with customers did not give rise to contract assets or liabilities during the nine months ended September 30, 2021.

Concentration of Credit Risk and Major Customers

As is common in the pharmaceutical industry for products treating rare diseases, Fintepla is distributed through exclusive arrangements with a specialty distributor in the U.S. and through a 3PL who distributes to pharmacy providers throughout Europe (currently, in Germany and France). As a result, our accounts receivable balance at September 30, 2021 is highly concentrated with our U.S. customer, which accounted for over 80% of the balance and over 80% of net product revenue for the three and nine months ended September 30, 2021. Accounts receivable are stated net of an allowance that reflects our current estimate of credit losses expected to occur over the life of the receivable. Estimates of our allowance for credit losses consider a number of factors including existing contractual payment terms, individual customer circumstances, historical payment patterns of our customers, a review of the local economic environment and its potential impact on expected future customer payment patterns. As of September 30, 2021 and December 31, 2020, we believe that the allowances for doubtful accounts, if any, are adequate based on our analysis of the specific business circumstances and expectations of collection for each of the underlying accounts.