Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Cumulative Allowance for Changes in Expected Cash Flows

The following table sets forth the activity in the cumulative allowance for changes in expected cash flows from financial royalty assets, inclusive of the cumulative allowance for credit losses, as of the dates indicated (in thousands):


	Activity for the Year
Balance at December 31, 2018	$	(1,982,897)
Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets	(322,717)
Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets	1,342,038
Write-off of cumulative allowance (a)	95,158
Balance at December 31, 2019	$	(868,418)
Cumulative adjustment for adoption of ASU 2016-13	(192,705)
Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets	(645,612)
Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets	570,959
Write-off of cumulative allowance (a)	2,964
Write-off of credit loss allowance (b)	25,174
Current period provision expense for credit losses, net (c)	(156,186)
Balance at December 31, 2020	$	(1,263,824)

Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets	(912,710)
Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets	446,955
Write-off of cumulative allowance (a)	21,721

Current period provision income for credit losses, net (c)	12,913
Balance at December 31, 2021	$	(1,694,945)

(a) Relates to amounts removed from the allowance at the end of a royalty asset’s life to bring the account balance to zero. Write-offs solely impact the asset account and allowance account; there is no impact on the consolidated statements of operations.

(b) Relates to amounts reversed out of the credit loss allowance associated with omecamtiv mecarbil as a result of the write-off of the related financial royalty asset balance of $90.2 million.

(c) In the year ended December 31, 2020, the provision for credit losses was primarily related to certain additions to our portfolio of financial royalty assets with limited protective rights in 2020, mainly the final tranche of Tazverik. In the year ended December 31, 2021,the provision income for credit losses was primarily related to a significant decline in the financial asset value for Tazverik, which was offset by increases in our portfolio of financial royalty assets with limited protective rights in 2021, primarily related to zavegepant.