REVENUES

Revenues by disaggregated category were as follows (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Product revenues:
Gross product revenues	$	172,646		$	100,258		$	332,082		$	178,217
Discounts and allowances	(26,810		)	(12,254		)	(51,974		)	(21,336		)
Net product revenues	145,836			88,004			280,108			156,881
Collaboration revenues:
License revenues⁽¹⁾	31,908			9,156			100,938			20,370
Research and development services revenues⁽²⁾	6,805			2,175			16,904			3,307
Other collaboration revenues⁽³⁾	1,559			(327		)	1,877			(663		)
Total collaboration revenues	40,272			11,004			119,719			23,014
Total revenues	$	186,108		$	99,008		$	399,827		$	179,895

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(1)

License revenues for the three and six months ended June 30, 2018 included revenues related to the portion of three milestones that were allocated to the transfer of intellectual property licenses and were recognized in the current period and royalty revenue from Ipsen and Genentech. License revenues for the three and six months ended June 30, 2017 included the recognition of deferred revenues from upfront payments and a non-substantive milestone that were being amortized over various periods, as well as royalty revenues from Ipsen and Genentech. License revenues for the six months ended June 30, 2017 also included a milestone payment from Bristol-Myers Squibb Company (“BMS”). Upon the adoption of Topic 606, the allocation of proceeds from our collaboration partners between licenses and research and development services as well as the timing of recognition has changed. Therefore, among other changes, as of January 1, 2018, the portion of proceeds allocated to intellectual property licenses for our Ipsen and Takeda collaboration agreements are recognized immediately and License revenues no longer includes revenues related to the amortization of deferred revenue.

(2)

Research and development services revenues for the three and six months ended June 30, 2018 included the recognition of deferred revenue for the portion of the upfront and milestone payments that have been allocated to the research and development services performance obligation which are being amortized through early 2030, as well as development cost reimbursements earned on our collaboration agreements. As described above, we did not allocate any of our upfront payments or milestones to research and development services prior to the adoption of Topic 606 and therefore Research and development services revenues for the three and six months ended June 30, 2017 included only development cost reimbursements earned on our collaboration agreements.

(3)

Other collaboration revenues for three and six months ended June 30, 2018 included net product supply revenues from Ipsen and Takeda and the profit on the U.S. commercialization of COTELLIC from Genentech. Losses on the U.S. commercialization of COTELLIC for the three and six months ended June 30, 2017 were included in Selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations and therefore Other collaboration revenues for the three and six months ended June 30, 2017 included only net product supply revenues.

During the three and six months ended June 30, 2018, Net product revenues and License revenues related to goods transferred at a point in time and Research and development services revenues related to services performed over time. License revenues and Research and development services revenues were recorded in accordance with Topic 606 during 2018 and Topic 605 in prior periods. Other collaboration revenues, which included the profit on the U.S. commercialization of COTELLIC and net product supply revenues, were recorded in accordance with Topic 808 for all periods presented.

Net product revenues disaggregated by product were as follows (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
CABOMETYX	$	141,121	$	80,861	$	270,055	$	143,220
COMETRIQ	4,715		7,143		10,053		13,661
Net product revenues	$	145,836	$	88,004	$	280,108	$	156,881

Total revenues disaggregated by significant customer were as follows (dollars in thousands):



	Three Months Ended June 30,
	2018				2017
	Dollars		Percent of total		Dollars		Percent of total
Ipsen	$	34,043	18	%	$	5,494	6	%
Caremark L.L.C.	$	26,421	14	%	$	18,435	19	%
Affiliates of McKesson Corporation	$	23,321	13	%	$	12,846	13	%
Diplomat Specialty Pharmacy	$	18,475	10	%	$	22,599	23	%
Accredo Health, Incorporated	$	19,714	11	%	$	13,619	14	%
Others, individually less than 10% of Total revenues for all periods presented	$	64,134	34	%	$	26,015	25	%
Total revenues	$	186,108	100	%	$	99,008	100	%



	Six Months Ended June 30,
	2018				2017
	Dollars		Percent of total		Dollars		Percent of total
Ipsen	$	87,852	22	%	$	10,024	6	%
Caremark L.L.C.	$	52,809	13	%	$	32,254	18	%
Affiliates of McKesson Corporation	$	44,652	11	%	$	24,124	13	%
Diplomat Specialty Pharmacy	$	38,622	10	%	$	42,449	24	%
Accredo Health, Incorporated	$	38,000	10	%	$	23,059	13	%
Others, individually less than 10% of Total revenues for all periods presented	$	137,892	34	%	$	47,985	26	%
Total revenues	$	399,827	100	%	$	179,895	100	%

Total revenues disaggregated by geographic region were as follows (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
U.S.	$	150,079	$	89,371	$	287,072	$	163,046
Europe	34,043		5,494		87,852		10,024
Rest of the world	1,986		4,143		24,903		6,825
Total revenues	$	186,108	$	99,008	$	399,827	$	179,895

Net product revenues are attributed to regions based on the ship-to location. Collaboration revenues are attributed to regions based on the location of our collaboration partners’ headquarters.

Product Sales Discounts and Allowances

The activities and ending reserve balances for each significant category of discounts and allowances (which constitute variable consideration) were as follows (in thousands):



	Chargebacks and Discounts for Prompt Payment			Other Customer Credits/Fees and Co-pay Assistance			Rebates			Total
Balance at December 31, 2017	$	1,928		$	1,795		$	5,770		$	9,493
Provision related to sales made in:
Current period	32,088			6,336			14,318			52,742
Prior periods	(737		)	—			(32		)	(769		)
Payments and customer credits issued	(30,675		)	(6,850		)	(10,194		)	(47,719		)
Balance at June 30, 2018	$	2,604		$	1,281		$	9,862		$	13,747

Chargebacks and discounts for prompt payment are recorded as a reduction of trade receivables and the remaining reserve balances are classified as Other current liabilities in the accompanying Condensed Consolidated Balance Sheets.

Contract Assets and Liabilities

We receive payments from our licensees based on billing schedules established in each contract. Amounts are recorded as accounts receivable when our right to consideration is unconditional. Upfront and milestone payments may require deferral of revenue recognition to a future period until we perform our obligations under these arrangements and are recorded as deferred revenue upon receipt or when due. We may also recognize revenue in advance of the contractual billing schedule and such amounts are recorded as unbilled collaboration revenue when recognized. Changes in our contract assets and liabilities under Topic 606 were as follows (in thousands):



	Contract Assets: Unbilled Collaboration Revenue						Contract Liabilities: Deferred Revenue
	Current Portion			Long-term Portion			Current Portion			Long-term Portion
Balance at December 31, 2017	$	—		$	—		$	31,984		$	238,520
Adoption of Topic 606	9,588			12,247			(23,591		)	(213,079		)
Balance at January 1, 2018	9,588			12,247			8,393			25,441
Increases as a result of a change in transaction price and recognition of revenues as services are performed	471			2,534			—			—
Transfer to receivables from contract assets recognized at the beginning of the period	(9,109		)	—			—			—
Increases as a result of the deferral of milestones achieved in period, excluding amounts recognized as revenue	—			—			948			3,835
Revenue recognized that was included in the contract liability balance at the beginning of the period	—			—			(4,977		)	—
Other adjustments ⁽¹⁾	(950		)	(14,781		)	1,575			(17,306		)
Balance at June 30, 2018	$	—		$	—		$	5,939		$	11,970

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(1)	Includes reclassification of deferred revenue from long-term to current and adjustments made due to netting of contract assets and liabilities by collaboration agreement.

During the three and six months ended June 30, 2018, we recognized $32.2 million and $103.8 million, respectively, in revenues under Topic 606 for performance obligations satisfied in previous periods. Such revenues primarily related to milestone and royalty payments allocated to our license performance obligations of our collaborations with Ipsen and Daiichi Sankyo Company, Limited (“Daiichi Sankyo”).