XML 42 R23.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Revenues (Tables) | 12 Months Ended
--- | ---
Dec. 28, 2018
Revenue from Contract with Customer [Abstract] |
Disaggregation of Revenue | Revenues by disaggregated category were as follows (in thousands):
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
Product revenues: |  |  |  |  |
Gross product revenues | $ | 738,529 |  |  | $ | 402,569 |  |  | $ | 151,499 |
Discounts and allowances | (119,250 | ) |  | (53,561 | ) |  | (16,124 | )
Net product revenues | 619,279 |  |  | 349,008 |  |  | 135,375 |
Collaboration revenues: |  |  |  |  |
License revenues (1) | 192,188 |  |  | 96,637 |  |  | 56,286 |
Research and development service revenues (2) | 39,501 |  |  | 8,737 |  |  | — |
Other collaboration revenues (3) | 2,858 |  |  | (1,905 | ) |  | (207 | )
Total collaboration revenues | 234,547 |  |  | 103,469 |  |  | 56,079 |
Total revenues | $ | 853,826 |  |  | $ | 452,477 |  |  | $ | 191,454 |
____________________
(1) | Upon the adoption of Topic 606 as of January 1, 2018, 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 have changed. License revenues for the year ended December 31, 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 years ended December 31, 2017 and 2016 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 year ended December 31, 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, prior to the adoption of Topic 606, we did not allocate any of our upfront payments or milestones to research and development services; therefore, Research and development service revenues for the years ended December 31, 2017 included only development cost reimbursements earned on our collaboration agreements.
(3) | Other collaboration revenues for the year ended December 31, 2018 included royalties we paid to GSK on Ipsen’s sales of products containing cabozantinib, the profit on the U.S. commercialization of COTELLIC from Genentech and product supply revenues. Other collaboration revenues for the years ended years ended December 31, 2017 and 2016 included only royalties we paid to GSK on Ipsen’s sales of products containing cabozantinib and product supply revenues, as the profits and losses on the U.S. commercialization of COTELLIC for the period were included in Selling, general and administrative expenses.
Duri ng the year ended December 31, 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 royalties we paid to GSK on Ipsen’s sales of products containing cabozantinib, the profit on the U.S. commercialization of COTELLIC from Genentech and product supply revenue, were recorded in accordance with Topic 808 for all periods presented. Net product revenues disaggregated by product were as follows (in thousands):
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
CABOMETYX | $ | 599,946 |  |  | $ | 324,000 |  |  | $ | 93,481 |
COMETRIQ | 19,333 |  |  | 25,008 |  |  | 41,894 |
Net product revenues | $ | 619,279 |  |  | $ | 349,008 |  |  | $ | 135,375 |
Total revenues disaggregated by significant customer were as follows (dollars in thousands):
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
| Dollars |  | Percent of total |  | Dollars |  | Percent of total |  | Dollars |  | Percent of total
Ipsen | $ | 182,879 |  |  | 21 | % |  | $ | 69,792 |  |  | 15 | % |  | $ | 33,252 |  |  | 17 | %
Caremark L.L.C. | 110,698 |  |  | 13 | % |  | 73,921 |  |  | 16 | % |  | 17,746 |  |  | 9 | %
Affiliates of McKesson Corporation | 99,916 |  |  | 12 | % |  | 48,662 |  |  | 11 | % |  | 13,143 |  |  | 7 | %
Accredo Health, Incorporated | 81,028 |  |  | 9 | % |  | 50,716 |  |  | 11 | % |  | 16,631 |  |  | 9 | %
Diplomat Specialty Pharmacy | 74,244 |  |  | 9 | % |  | 83,059 |  |  | 18 | % |  | 63,826 |  |  | 33 | %
Others, individually less than 10% of Total revenues for all periods presented | 305,061 |  |  | 36 | % |  | 126,327 |  |  | 29 | % |  | 46,856 |  |  | 25 | %
Total revenues | $ | 853,826 |  |  | 100 | % |  | $ | 452,477 |  |  | 100 | % |  | $ | 191,454 |  |  | 100 | %
Total revenues disaggregated by geographic region were as follows (in thousands):
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
U.S. | $ | 632,927 |  |  | $ | 367,906 |  |  | $ | 140,709 |
Europe | 182,879 |  |  | 69,792 |  |  | 35,745 |
Rest of the world | 38,020 |  |  | 14,779 |  |  | 15,000 |
Total revenues | $ | 853,826 |  |  | $ | 452,477 |  |  | $ | 191,454 |
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 |  | Returns |  | Total
Balance at December 31, 2016 | $ | 1,802 |  |  | $ | 794 |  |  | $ | 2,627 |  |  | $ | 351 |  |  | $ | 5,574 |
Provision related to sales made in: |  |  |  |  |  |  |  |  |
Current period | 33,310 |  |  | 7,301 |  |  | 14,390 |  |  | — |  |  | 55,001 |
Prior periods | (817 | ) |  | — |  |  | (624 | ) |  | — |  |  | (1,441 | )
Payments and customer credits issued | (32,367 | ) |  | (6,300 | ) |  | (10,623 | ) |  | (351 | ) |  | (49,641 | )
Balance at December 31, 2017 | 1,928 |  |  | 1,795 |  |  | 5,770 |  |  | — |  |  | 9,493 |
Provision related to sales made in: |  |  |  |  |  |  |  |  |
Current period | 75,543 |  |  | 13,015 |  |  | 31,040 |  |  | 2 |  |  | 119,600 |
Prior periods | (403 | ) |  | 206 |  |  | (153 | ) |  | — |  |  | (350 | )
Payments and customer credits issued | (74,746 | ) |  | (11,978 | ) |  | (24,741 | ) |  | (2 | ) |  | (111,467 | )
Balance at December 31, 2018 | $ | 2,322 |  |  | $ | 3,038 |  |  | $ | 11,916 |  |  | $ | — |  |  | $ | 17,276 |
Revenue | Revenue Topic 606 supersedes all previous revenue recognition requirements in accordance with generally accepted accounting principles. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration to which the entity is entitled to in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of Topic 606, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. Net Product Revenues We sell our products principally to specialty distributors and specialty pharmacy providers, or collectively, our Customers. These Customers subsequently resell our products to health care providers and patients. In addition to distribution agreements with Customers, we enter into arrangements with health care providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of our products. Revenues from product sales are recognized when the Customer obtains control of our product, which occurs at a point in time, typically upon delivery to the Customer. Product Sales Discounts and Allowances Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and that result from discounts, chargebacks, rebates, co-pay assistance, returns and other allowances that are offered within contracts between us and our Customers, health care providers, payors and other indirect customers relating to the sales of our products. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the Customer) or a current liability (if the amount is payable to a party other than a Customer). Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted Customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of our contracts. The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenues and earnings in the period such variances become known. Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from a specialty distributor. Contracted customers, which currently consist primarily of Public Health Service institutions, non-profit clinics, Federal government entities purchasing via the Federal Supply Schedule and Group Purchasing Organizations, and health maintenance organizations, generally purchase the product at a discounted price. The specialty distributor, in turn, charges back to us the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by the customer. The allowance for chargebacks is based on an estimate of sales to contracted customers. Discounts for Prompt Payment: Our Customers in the U.S. receive a discount of 2% for prompt payment. We expect our Customers will earn 100% of their prompt payment discounts and, therefore, we deduct the full amount of these discounts from total product sales when revenues are recognized. Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program, other government programs and commercial contracts. Rebate amounts owed after the final dispensing of the product to a benefit plan participant are based upon contractual agreements or legal requirements with public sector benefit providers, such as Medicaid. The allowance for rebates is based on statutory or contractual discount rates and expected utilization. Our estimates for the expected utilization of rebates are based on customer and payer data received from the specialty pharmacies and distributors and historical utilization rates. Rebates are generally invoiced by the payer and paid in arrears, such that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s shipments to our customers, plus an accrual balance for known prior quarters’ unpaid rebates. If actual future rebates vary from estimates, we may need to adjust our accruals, which would affect net product revenues in the period of adjustment. Allowances for rebates also include amounts related to the Medicare Part D Coverage Gap Discount Program. In the U.S., the Medicare Part D prescription drug benefit mandates participating manufacturers to fund 50%, and increasing to 70% in 2019, of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. Our estimates for expected Medicare Part D coverage gap amounts are based on customer and payer data received from specialty pharmacies and distributors and historical utilization rates. Funding of the coverage gap is invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s shipments to customer, plus an accrual balance for known prior quarters’ unpaid claims. If actual future funding varies from estimates, we may need to adjust our accruals, which would affect net product revenues in the period of adjustment. Co-payment Assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. We accrue a liability for co-payment assistance based on actual program participation and estimates of program redemption using customer data provided by the specialty distributor that administers the copay program. Other Customer Credits: We pay fees to our Customers for account management, data management and other administrative services. To the extent the services received are distinct from the sale of products to the Customer, these payments are classified in Selling, general and administrative expenses in our Consolidated Statements of Operations. Collaboration Revenues We enter into collaboration arrangements, under which we license certain rights to our intellectual property to third parties. The terms of these arrangements typically include payment to us for one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; product supply services; development cost reimbursements; profit sharing arrangements; and royalties on net sales of licensed products. Except for profit sharing arrangements and payments for product supply services, each of these payment types were within the scope of Topic 606 during the year ended December 31, 2018. As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract. These key assumptions may include forecasted revenues, clinical development timelines and costs, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success. Prior period amounts continue to be reported in accordance with our historic accounting under previous revenue recognition guidance, Topic 605. See “ — Recently Adopted Accounting Pronouncements — Impact of Adoption of Topic 606 and Topic 842” above, for more information about the impact of the adoption on Topic 606. Up-front License Fees: If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues from nonrefundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. Regulatory and Development Milestone Payments: At the inception of each arrangement that includes development milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until uncertainty associated with the approvals has been resolved. The transaction price is then allocated to each performance obligation, on a relative standalone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability of achieving such development and regulatory milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect Collaboration revenues and earnings in the period of adjustment. Product Supply Services: Arrangements that include a promise for future supply of drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options. We assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. Development Cost Reimbursements: Our Ipsen and Takeda arrangements include promises of future clinical development and drug safety services, as well as participation on certain joint committees. We have determined that these services collectively are distinct from the licenses provided to Ipsen and Takeda and as such, these promises are accounted for as a separate performance obligation recorded over time. We record revenue for these services as the performance obligations are satisfied, which we estimate using internal development costs incurred and projections through the term of the arrangements. Profit Sharing Arrangements: Under the terms of our collaboration agreement with Genentech for cobimetinib, we are entitled to a share of U.S. profits and losses received in connection with commercialization of cobimetinib. We are also entitled to low double-digit royalties on ex-U.S. net sales. We account for such arrangements in accordance with ASC Topic 808: Collaborative Arrangements (Topic 808). We have determined that we are an agent under the agreement and therefore revenues are recorded net of costs incurred. We record U.S. profits and losses under the collaboration agreement in the period earned based on our estimate of those amounts. We recognized an annual profit under the agreement for the year ending December 31, 2018 and accordingly, those profits are recognized as Collaboration revenues in the accompanying Consolidated Statements of Operations. Prior to 2018, the commercialization of cobimetinib in the U.S. had not been profitable for any annual period and accordingly, losses for periods prior to 2018 were recognized as Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations. Sales-based Milestone Payments and Royalties: For arrangements that include sales-based royalties, including milestone payments based on the volume of sales, the license is deemed to be the predominant item to which the royalties or sales-based milestones relate and we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Cost of Goods Sold Cost of goods sold is related to our product revenues and consists primarily of a 3% royalty we are required to pay GlaxoSmithKline (GSK) on all net sales of any product incorporating cabozantinib, indirect labor costs, the cost of manufacturing, write-downs related to expiring and excess inventory, shipping and other third-party logistics and distribution costs for our product. We consider regulatory approval of product candidates to be uncertain and product manufactured prior to regulatory approval may not be sold unless regulatory approval is obtained. As such, the manufacturing costs for product candidates incurred prior to regulatory approval were not capitalized as inventory but are expensed as research and development costs. Portions of the manufacturing costs for inventory sold during the years ended December 31, 2018, 2017 and 2016 were incurred prior to the regulatory approval of CABOMETYX and COMETRIQ and, therefore, were expensed as research and development costs when incurred, rather than capitalized as inventory. 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.
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 | 37,881 |  |  | 4,545 |  |  | — |  |  | — |
Transfer to receivables from contract assets recognized at the beginning of the period | (46,052 | ) |  | — |  |  | — |  |  | — |
Increases as a result of the deferral of milestones achieved in period, excluding amounts recognized as revenue | — |  |  | — |  |  | 1,718 |  |  | 7,237 |
Revenue recognized that was included in the contract liability balance at the beginning of the period | — |  |  | — |  |  | (8,683 | ) |  | — |
Other adjustments (1) | (1,417 | ) |  | (16,792 | ) |  | (1,428 | ) |  | (16,781 | )
Balance at December 31, 2018 | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 15,897 |
____________________
(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.

X
- Definition Reconciliation Of Sales Discount And Allowances Reserve Balances [Table Text Block] + References No definition available. + Details
Name: | exel_ReconciliationOfSalesDiscountAndAllowancesReserveBalancesTableTextBlock
Namespace Prefix: | exel_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of contract balances and changes in contract balances. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=109196051&loc=SL49130551-203045 + Details
Name: | us-gaap_ContractWithCustomerAssetAndLiabilityTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of disaggregation of revenue into categories depicting how nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factor. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=109196051&loc=SL49130545-203045 + Details
Name: | us-gaap_DisaggregationOfRevenueTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_RevenueFromContractWithCustomerAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy for revenue from contract with customer. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 4 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=84158767&loc=d3e18823-107790 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
Name: | us-gaap_RevenueFromContractWithCustomerPolicyTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration