On February 28, 2019, the Company entered into a development funding agreement (the “SFJ agreement”), with SFJ Pharmaceuticals Group (“SFJ”), under which SFJ agreed to provide funding to the Company to support the development of pegcetacoplan for the treatment of patients with PNH. Pursuant to the SFJ agreement, SFJ paid the Company $60.0 million following the signing of the agreement and agreed to pay the Company up to an additional $60.0 million in the aggregate in three equal installments upon the achievement of specified development milestones with respect to the Company’s Phase 3 program for pegcetacoplan in PNH.

On June 7, 2019, the Company and SFJ amended the SFJ agreement, (such amendment, the “SFJ amendment”). Under the SFJ amendment, SFJ agreed to make an additional $20.0 million funding payment to the Company to support the development of systemic pegcetacoplan for the treatment of patients with PNH.

As of January 29, 2020, the Company had received a total of $140.0 million from SFJ as the Company met milestones as identified in the SFJ agreement. The Company did not receive any additional funds from SFJ after January 29, 2020.

Under the SFJ agreement, following regulatory approval by the FDA in May 2021 for the use of systemic pegcetacoplan as a treatment for PNH, the Company became obligated to pay SFJ an initial payment of $4.0 million and then an additional $226.0 million in the aggregate in six additional annual payments with the majority of the payments being made from the third anniversary to the sixth anniversary of regulatory approval. The Company obtained regulatory approval by the FDA in May 2021. The Company paid SFJ the initial payment of $4.0 million in June 2021 and the first annual payment of $11.5 million in May 2022. The subsequent annual payments remaining are due and payable in May of each year from 2023 through 2027.

Following regulatory approval of systemic pegcetacoplan by the European Medicines Agency (“EMA”), the Company became obligated to pay SFJ an initial payment of $5.0 million on January 28, 2022 and then an additional $225.0 million in the aggregate in six additional annual payments with the majority of the payments being made from the third anniversary to the sixth anniversary of regulatory approval. The Company obtained regulatory approval by the EMA on December 15, 2021. The Company paid SFJ the initial payment of $5.0 million in January 2022 and the first annual payment of $18.0 million in December 2022. The subsequent annual payments are due and payable in December of each year from 2023 through 2027.

Additionally, the Company granted a security interest to SFJ in all of its assets, excluding intellectual property and license agreements to which it is a party. In connection with the grant of the security interest, the Company agreed to certain affirmative and negative covenants, including restrictions on its ability to pay dividends, incur additional debt or enter into licensing transactions with respect to its intellectual property, other than specified types of licenses.

From December 15, 2021 to the final annual payment due in December 2027, the development liability will be accreted from its initial carrying amount to the total payment amount using the effective interest rate method under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 835, Interest, over the remaining life of the SFJ agreement. The difference between the carrying amount and the total payment amount is presented as a discount to the development liability. The accretion is recorded as interest expense in the unaudited condensed consolidated statement of operations.

The following table summarizes the development liability (in thousands):


	March 31, 2023			December 31, 2022			Effective Interest Rate
Development liability	$	421,500		$	421,500			7.91	%
Less: Unamortized discount to development liability		(69,716	)		(76,349	)
Less: Current portion of development liability, net of discount		(30,071	)		(29,504	)
Total long term development liability	$	321,713		$	315,647

For the three months ended March 31, 2023, interest expense of $6.6 million was recorded for the accretion of the development liability.

Future minimum SFJ payments as of March 31, 2023 is as follows (in thousands):


2023	$	55,500
2024		98,750
2025		103,000
2026		109,000
2027 and thereafter		55,250
Total future minimum payments		421,500