Discontinued Operations

9 Months Ended

Sep. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

On March 31, 2021, we completed the sale of our oncology business to Servier. We have determined the sale of the oncology business represents a strategic shift that had a major effect on our business and therefore met the criteria for classification as discontinued operations at March 31, 2021. Accordingly, the oncology business is reported as discontinued operations in accordance with ASC 205-20, Discontinued Operations. The related assets and liabilities of the oncology business are classified as assets and liabilities of discontinued operations in the condensed consolidated balance sheets and the results of operations from the oncology business as discontinued operations in the condensed consolidated statements of operations. Applicable amounts in prior years have been recast to conform to this discontinued operations presentation. We recognized a gain on the sale of the oncology business upon closing.

The following table presents the assets and liabilities of the discontinued operations as of December 31, 2020:


(in thousands)	December 31, 2020
Assets
Current assets:
Accounts receivable, net	$	21,328
Collaboration receivable – related party	2,123
Collaboration receivable – other	1,948
Inventory	14,698
Prepaid expenses and other current assets	7,762
Total current assets of discontinued operations	47,859
Other non-current assets	2,601
Total assets of discontinued operations	$	50,460
Liabilities
Current liabilities:
Accounts payable	$	9,120
Accrued expenses	29,339
Total current liabilities of discontinued operations	38,459
Liability related to the sale of future revenue, net of debt issuance costs	261,269
Total liabilities of discontinued operations	$	299,728

The following table presents the net liabilities transferred for the sale oncology business for the quarter ended March 31, 2021:


(in thousands)	March 31, 2021
Assets
Current assets:
Accounts receivable, net	$	25,386
Collaboration receivable – related party	2,253
Collaboration receivable – other	2,438
Inventory	16,190
Prepaid expenses and other current assets	7,125
Total current assets of discontinued operations	53,392
Other non-current assets	2,234
Total assets of discontinued operations	$	55,626

Liabilities
Current liabilities:
Accounts payable	$	4,245
Accrued expenses	30,288
Total current liabilities of discontinued operations	34,533
Liability related to the sale of future revenue, net of debt issuance costs	264,281
Total liabilities of discontinued operations	298,814
Net liabilities distributed to Servier	$	(243,188)

The following table presents the gain on the sale for the nine months ended September 30, 2021:


(in thousands)	September 30, 2021
Cash proceeds	$	1,802,936
Less: transaction and insurance costs	(53,573)
Less: net liabilities distributed	(239,770)
Gain on sale, pre-tax	1,989,133
Income tax expense	(16,756)
Gain on sale, net of tax	$	1,972,377

As of September 30, 2021, there were no assets or liabilities classified as discontinued operations.

The following table presents the financial results of the discontinued operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020
Revenues:
Product revenue, net	$	—	$	31,716	$	36,909	$	81,971
Collaboration revenue – related party	—		1,206		1,350		67,038
Collaboration revenue – other	—		1,101		491		2,786
Royalty revenue – related party	—		683		2,659		7,356
Total revenue	—		34,706		41,409		159,151
Cost and expenses:
Cost of sales	—		638		706		1,846
Research and development	—		37,612		41,564		110,340
Selling, general and administrative	—		6,493		8,551		20,096
Total cost and expenses	—		44,743		50,821		132,282
(Loss) income from discontinued operations	—		(10,037)		(9,412)		26,869
Non-cash interest expense for the sale of future revenue	—		(9,767)		(5,697)		(11,818)
(Loss) gain on the sale of the oncology business	(618)		—		1,989,133		—
(Loss) income from discontinued operations, pre-tax	(618)		(19,804)		1,974,024		15,051
Income tax expense	(3,889)		—		(16,756)		—
Net (loss) income from discontinued operations	$	(4,507)	$	(19,804)	$	1,957,268	$	15,051

In accordance with ASC 205-20, only expenses specifically identifiable and related to a business to be disposed may be presented in discontinued operations. As such, the research and development, marketing, selling and general and administrative expenses in discontinued operations include corporate costs incurred directly to solely support our oncology business.

We have also entered into a Transition Services Agreement with Servier, through which we will provide transitional services related to discovery, clinical development, technical operations, commercial and general and administrative related activities for periods ranging from one month to approximately one year after March 31, 2021.

The milestone payment for approval of vorasidenib and royalty payments related to vorasidenib and TIBSOVO® represent contingent consideration. Contingent consideration has been accounted for as a gain contingency in accordance with ASC 450, Contingencies, and will be recognized in earnings in the period when realizable.