Revenue

9 Months Ended

Sep. 30, 2020

Revenue

Revenue

7.           Revenue

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2019		2020		2019		2020
Product revenue, net	$	1,445	$	(47)	$	1,445	$	61
Collaboration revenues		5,051		616		6,051		768
Research premium		424		211		1,168		802
Government grants		—		511		484		936
Total	$	6,920	$	1,291	$	9,148	$	2,567

Collaboration revenues for the nine months ended September 30, 2019 reflects a $1.0 million upfront payment under the Sunovion License Agreement received in April 2019, and a $5.0 million milestone payment under the Sinovant License Agreement (see Note 11). Collaboration revenues for the three and nine months ended September 30, 2020 include a $0.5 million regulatory milestone payment from Sunovion, as well as our share of revenues associated with the SIVEXTRO distribution agreement with Merck & Co., Inc.

We sell our products to pharmaceutical wholesalers/distributors (i.e., our customers). Our wholesalers/distributors in turn sell our products directly to clinics, hospitals, and private practices. Revenue from our product sales is recognized as physical delivery of product occurs (when our customer obtains control of the product), in return for agreed-upon consideration.

For the three and nine months ended September 30, 2020 product revenues, gross were $8 thousand and $0.4 million, respectively. Our product revenues, gross (i.e., delivered units multiplied by the contractual price per unit) are reduced by our corresponding gross-to-net (“GTN”) estimates, resulting in our reported “product revenues, net” in the accompanying consolidated statements of operations. These GTN estimates are based upon information received from external sources (such as written or oral information obtained from our customers with respect to their period-end inventory levels and sales to end-users during the period), in combination with management’s informed judgments. Due to the inherent uncertainty of these estimates, the actual amount incurred may be materially above or below the amount initially estimated when product revenues are originally recorded, then requiring prospective adjustments to our reported product revenues, net.

The following tables summarizes gross-to-net (“GTN”) adjustments for the periods presented:

	Three Months Ended		Nine Months Ended
(in thousands)	September 30, 2020		September 30, 2020
Product revenue, gross	$	8	$	406
GTN accruals
Chargebacks and cash discounts		—		13
Medicaid and Medicare rebates		1		47
Other returns, rebates, discounts and adjustments		2		94
Total GTN accruals		3		154
Product revenue		5		252
Adjustments to prior period accruals
Returns reserve (1)		(52)		(391)
GTN accrual adjustments		—		200
Product revenue, net	$	(47)	$	61

(1) As of September 30, 2020, the Company recorded a returns reserve adjustment for slow-moving inventory, representing 50% of XENLETA IV inventory held at our Specialty Distributors, as well as an adjustment for returns from a single mail order specialty pharmacy.