Revenue

9 Months Ended

Sep. 30, 2022

Revenue

Revenue

Note 3 — Revenue

The Company had three revenue-generating contracts with customers in the three and nine months ended September 30, 2022 compared to two in the three and nine months ended September 30, 2021: a collaboration and license agreement with GSK, a collaboration agreement with Astellas and a strategic collaboration and license agreement with Genentech.

Revenue comprises the following categories (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Development revenue	$	7,007	$	1,203	$	16,120	$	4,732
	$	7,007	$	1,203	$	16,120	$	4,732

Deferred revenue decreased by $46,567,000 from $199,422,000 at December 31, 2021 to $152,855,000 at September 30, 2022 primarily due to a $35,693,000 decrease caused by the change in the exchange rate between pound sterling and the U.S. dollar from £1.00 to $1.35 at December 31, 2021 to £1.00 to $1.11 at September 30, 2022.

As of December 31, 2021, there was deferred revenue of $199,422,000 of which $13,038,000 was recognized as revenue in the nine months ended September 30, 2022.

The aggregate amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the agreements as of September 30, 2022 was $326,545,000.

The Genentech Collaboration and License Agreement

The amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the Genentech agreement as of September 30, 2022 was $276,396,000. Of this amount $170,265,000 is allocated to the research services and rights granted for the initial ‘off-the-shelf’ collaboration targets, $88,016,000 is allocated to the research services and rights granted for the personalized therapies, $12,228,000 is allocated to the material rights to designate the additional ‘off-the-shelf’ collaboration targets, $4,710,000 is allocated to the material right for the first option to extend the research term and $1,177,000 is allocated to the material right for the option to extend the research term a second time.

The Company expects to satisfy the performance obligations relating to the initial ‘off-the-shelf’ collaboration targets and the personalized therapies as development progresses and recognizes revenue based on an estimate of the percentage of completion of the project determined based on the costs incurred on the project as a percentage of the total expected costs. The Company expects to satisfy the performance obligations relating to the material rights to designate additional ‘off-the-shelf’ collaboration targets from the point that the options are exercised and then as development progresses, in line with the initial ‘off-the-shelf’ collaboration targets, or at the point in time that the rights expire. The Company expects to satisfy the performance obligations relating to the material rights to extend the research term from the point that the options are exercised and then over period of the extension, or at the point in time that the rights expire.

The Astellas Collaboration Agreement

The amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the Astellas agreement as of September 30, 2022 was $49,818,000, of which $12,337,000 is allocated to the rights granted for each of the two independent Astellas targets, $6,670,000 is allocated to research services and rights granted under the co-exclusive license for the first co-development target, $12,518,000 is allocated to research services and rights granted under the co-exclusive license for the second co-development target and $5,956,000 is allocated to research services and rights under the co-exclusive license for the third co-development targets. The Company expects to satisfy the performance obligations relating to the three co-development targets as development progresses and recognizes revenue based on an estimate of the percentage of completion of the project determined based on the costs incurred on the project as a percentage of the total expected costs. The Company has determined that the performance obligations relating to the two independent Astellas targets would be recognized at a point-in-time, upon commencement of the licenses in the event of nomination of the target, since they are right-to-use licenses.

The GSK Collaboration and License Agreement

The amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the GSK agreement as of September 30, 2022 was $330,000. The Company satisfies the performance obligations relating to the development of each target over time and recognizes revenue based on an estimate of the percentage of completion of the project determined based on the costs incurred on the project as a percentage of the total expected costs.

Future research, development, regulatory and sales milestones under each of the agreements are not considered probable as of September 30, 2022 and have not been included in the transaction price. Reimbursement of the research funding over the co-development period under the Astellas agreement is variable consideration and included in the transaction price as of September 30, 2022 to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. On October 24, 2022, the Company received notice of termination of the Collaboration and License Agreement, effective 60 days following the receipt of the notice of termination. As the terms of the transfer and related agreement are being negotiated, an estimate of the financial effect of this event cannot yet be made