Revenue |
6 Months Ended |
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Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revenue | Revenue Mylan Collaboration and License Agreement The Company and Mylan entered into a collaboration agreement in February 2018 (the “Mylan Collaboration”), pursuant to which the companies will collaborate exclusively, on a world-wide basis (excluding Japan), to develop, manufacture, and commercialize a biosimilar to the branded biologic product (onabotulinumtoxinA) marketed as BOTOX®. Under the Mylan Collaboration, Mylan paid the Company a non-refundable upfront payment of $25.0 million with additional contingent payments of up to $100.0 million in the aggregate, upon the achievement of specified clinical and regulatory (i.e. biosimilar biological pathway) milestones and of specified, tiered sales milestones of up to $225.0 million. The upfront payment does not represent a financing component for the transfer of goods or services. The contingent payments would be payable following Mylan’s decision to continue development services for Initial Phase and Phase 3 clinical trials and upon meeting certain milestones. In addition, Mylan would pay the Company low to mid double-digit royalties on any sales of the biosimilar in the U.S., mid double-digit royalties on any sales in Europe, and high single-digit royalties on any sales in other areas excluding Japan. However, the Company agreed to waive royalties for U.S. sales, up to a limit of $50.0 million in annual sales, during the first approximately four years after commercialization to defray launch costs. Revenue Recognition In accordance with ASC 606, transaction price is defined as the amount of consideration to which an entity expects to be entitled in exchange for promised goods or services to a customer. The initial estimated transaction price was $81.0 million which included a $25.0 million upfront payment, $40.0 million of development milestones, and the estimated variable consideration for cost-sharing payments from Mylan. The Company re-evaluates the transaction price at each reporting period. As of June 30, 2019, the transaction price allocated to the unfulfilled performance obligations is $76.4 million. The Company recognizes revenue and estimates deferred revenue based on the cost of services incurred over the total estimated cost of services to be provided for the development period. For revenue recognition purposes, the development period is estimated to extend through 2022. However, it is possible that this period will change and is assessed at each reporting date. For the three months ended June 30, 2019, the Company recognized no revenue as no development services were provided during this period, and for the six months ended June 30, 2019, the Company recognized revenue related to development services provided of $0.3 million. For the three and six months ended June 30, 2018, the Company recognized revenue related to development services of $0.7 million and $0.9 million, respectively. As of June 30, 2019 and December 31, 2018, the Company estimated short-term deferred revenue of $18.8 million and $8.6 million, respectively; and long-term deferred revenue of $2.2 million and $12.7 million, respectively. Fosun License Agreement The Company and Fosun entered into a license agreement (the “Fosun License Agreement”) in December 2018, whereby the Company has granted Fosun the exclusive rights to develop and commercialize the Company’s proprietary DAXI in mainland China, Hong Kong and Macau (the “Fosun Territory”) and certain sublicense rights. Under the Fosun License Agreement, the Company received a non-refundable upfront payment of $30.0 million net of foreign withholding tax of $3.0 million from Fosun in January 2019. The Company is also eligible to receive (i) additional contingent payments of up to $230.5 million upon the achievement of specified milestones, and (ii) tiered royalty payments in low double-digit to high-teen percentages on annual net sales. Revenue Recognition In accordance with ASC 606, transaction price is defined as the amount of consideration to which an entity expects to be entitled in exchange for promised goods or services to a customer. The Company estimated the transaction price for the Fosun License Agreement using the most likely amount method. The Company evaluated all of the variable payments to be received during the duration of the contract, which included payments from specified milestones, royalties, and estimated supplies to be delivered, and concluded only a certain milestone of $1.0 million was included in the transaction price. The Company will re-evaluate the transaction price at each reporting period and upon a change in circumstances. As of June 30, 2019, the transaction price allocated to unfulfilled performance obligation is $31.0 million. The Company will recognize revenue on the single performance obligation as control of the manufactured product is supplied to Fosun. For the six months ended June 30, 2019, no revenue has been recognized from the Fosun License Agreement. As of June 30, 2019 and December 31, 2018, substantially all of the $30.0 million non-refundable upfront payment was included in long-term deferred revenue.
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