Revenues (Tables)

9 Months Ended

Sep. 28, 2018

Revenue from Contract with Customer [Abstract]

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Product revenues:
Gross product revenues	$	193,356		$	111,148		$	525,438		$	289,365
Discounts and allowances	(30,410		)	(14,732		)	(82,384		)	(36,068		)
Net product revenues	162,946			96,416			443,054			253,297
Collaboration revenues:
License revenues⁽¹⁾	51,323			54,335			152,261			74,706
Research and development service revenues⁽²⁾	10,560			2,316			27,464			5,623
Other collaboration revenues⁽³⁾	568			(557		)	2,445			(1,221		)
Total collaboration revenues	62,451			56,094			182,170			79,108
Total revenues	$	225,397		$	152,510		$	625,224		$	332,405

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(1)

Upon the adoption of Topic 606, the allocation of proceeds from our collaboration partners, including upfront and milestone payments, between intellectual property licenses and research and development services as well as the resulting timing of recognition has changed. License revenues for the three and nine months ended September 30, 2018 included the immediate recognition of the portion of milestones that were allocated to the transfer of intellectual property licenses for those milestones for which it had become probable that a significant revenue reversal would not occur as well as royalty revenues from Ipsen and Genentech. License revenues for the three and nine months ended September 30, 2017 included the full recognition of substantive milestones achieved during the period, recognition of deferred revenues from upfront payments and a non-substantive milestone, which were being amortized over various periods, as well as royalty revenues from Ipsen and Genentech.

(2)

Research and development service revenues for the three and nine months ended September 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 service performance obligations 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; therefore, Research and development service revenues for the three and nine months ended September 30, 2017 included only development cost reimbursements earned on our collaboration agreements.

(3)

Other collaboration revenues for the three and nine months ended September 30, 2018 included net losses on product supply services provided to Ipsen and Takeda and the profit on the U.S. commercialization of COTELLIC from Genentech. Other collaboration revenues for the three and nine months ended September 30, 2017 included only net losses on product supply services, since losses on the U.S. commercialization of COTELLIC for the period were instead included in Selling, general and administrative expenses.

During the three and nine months ended September 30, 2018, Net product revenues and License revenues related to goods and intellectual property licenses 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 losses on product supply services, 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 September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
CABOMETYX	$	158,262	$	90,362	$	428,317	$	233,582
COMETRIQ	4,684		6,054		14,737		19,715
Net product revenues	$	162,946	$	96,416	$	443,054	$	253,297

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



	Three Months Ended September 30,
	2018				2017
	Dollars		Percent of total		Dollars		Percent of total
Ipsen	$	57,186	25	%	$	50,680	33	%
Caremark L.L.C.	30,707		14	%	20,272		13	%
Affiliates of McKesson Corporation	26,597		12	%	14,575		10	%
Diplomat Specialty Pharmacy	17,946		8	%	20,460		13	%
Accredo Health, Incorporated	20,677		9	%	13,445		9	%
Others, individually less than 10% of Total revenues for all periods presented	72,284		32	%	33,078		22	%
Total revenues	$	225,397	100	%	$	152,510	100	%



	Nine Months Ended September 30,
	2018				2017
	Dollars		Percent of total		Dollars		Percent of total
Ipsen	$	145,038	23	%	$	60,704	18	%
Caremark L.L.C.	83,516		13	%	52,526		16	%
Affiliates of McKesson Corporation	71,249		11	%	38,699		12	%
Diplomat Specialty Pharmacy	56,568		9	%	62,909		19	%
Accredo Health, Incorporated	58,677		9	%	36,504		11	%
Others, individually less than 10% of Total revenues for all periods presented	210,176		35	%	81,063		24	%
Total revenues	$	625,224	100	%	$	332,405	100	%

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
U.S.	$	166,270	$	97,807	$	453,342	$	260,853
Europe	57,186		50,680		145,038		60,704
Rest of the world	1,941		4,023		26,844		10,848
Total revenues	$	225,397	$	152,510	$	625,224	$	332,405

Activities and Ending Reserve Balances for Significant Categories of 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	52,296			9,208			21,192			82,696
Prior periods	(520		)	156			50			(314		)
Payments and customer credits issued	(50,726		)	(9,412		)	(17,070		)	(77,208		)
Balance at September 30, 2018	$	2,978		$	1,747		$	9,942		$	14,667

Contract Assets and Liabilities under Topic 606

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	37,744			4,037			—			—
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	—			—			873			3,712
Revenue recognized that was included in the contract liability balance at the beginning of the period	—			—			(6,114		)	—
Other adjustments ⁽¹⁾	(13,734		)	(16,284		)	(3,152		)	(26,885		)
Balance at September 30, 2018	$	24,489		$	—		$	—		$	2,268

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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.