COLLABORATION AGREEMENTS

We have established multiple collaborations with leading pharmaceutical companies for the commercialization and further development of cabozantinib, as well as with smaller, discovery-focused biotechnology companies to expand our product pipeline. Additionally, in line with our business strategy prior to the commercialization of our first product, COMETRIQ, we entered into other collaborations with leading pharmaceutical companies including Genentech, Daiichi Sankyo and BMS for other compounds and programs in our portfolio. See “Note 3. Collaboration Agreements” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 for a description of each of our collaboration agreements.

Under these collaborations, we are generally entitled to receive milestone and royalty payments, and for certain collaborations, payments for product supply services, development cost reimbursements, and/or profit-sharing payments. See “Note 2. Revenues” for information on collaboration revenues recognized during the three months ended March 31, 2019 and 2018.

Cabozantinib Commercial Collaborations

Ipsen Collaboration

In February 2016, we entered into a collaboration and license agreement with Ipsen for the commercialization and further development of cabozantinib. Pursuant to the terms of the collaboration agreement, Ipsen received exclusive commercialization rights for current and potential future cabozantinib indications outside of the U.S., Canada and Japan. The collaboration agreement was subsequently amended in December 2016 to include commercialization rights in Canada. We have also agreed to collaborate with Ipsen on the development of cabozantinib for current and potential future indications. Collaboration revenues under the collaboration agreement with Ipsen were as follows (in thousands):



	Three Months Ended March 31,
	2019		2018
Ipsen collaboration revenues	$	21,868	$	53,809

As of March 31, 2019, $46.8 million of the transaction price allocated to our research and development services performance obligation had not been satisfied. As of March 31, 2019, the net contract liability for the collaboration agreement with Ipsen was $10.7 million, of which 2.4 million was included in the Current portion of deferred revenue and $8.3 million was included in the Long-term portion of deferred revenue in the accompanying Condensed Consolidated Balance Sheets.

Takeda Collaboration

In January 2017, we entered into a collaboration and license agreement with Takeda. See “Note 11. Subsequent Events - Amendment to Collaboration Agreement with Takeda” for information regarding an amendment to our collaboration agreement with Takeda. Pursuant to this collaboration agreement, Takeda has exclusive commercialization rights for current and potential future cabozantinib indications in Japan, and the parties have agreed to collaborate on the clinical development of cabozantinib in Japan. Collaboration revenues under the collaboration agreement with Takeda were as follows (in thousands):



	Three Months Ended March 31,
	2019		2018
Takeda collaboration revenues	$	11,493	$	2,917

As of March 31, 2019, $25.2 million of the transaction price allocated to our research and development services performance obligation had not been satisfied. As of March 31, 2019, the net contract asset for the collaboration agreement with Takeda was $7.2 million, which was included in Unbilled collaboration revenue in the accompanying Condensed Consolidated Balance Sheets.

GlaxoSmithKline (GSK)

In October 2002, we established a product development and commercialization collaboration agreement with GSK. Under the terms of the collaboration agreement, GSK had the right to choose cabozantinib for further development and commercialization, but notified us in October 2008 that it had waived its right to select the compound for such activities. Although the collaboration agreement was terminated in December 2014, GSK continues to be entitled to a 3% royalty we are required to pay on all net sales of any product incorporating cabozantinib by us and our collaboration partners. Royalties accruing to GSK in connection with the sales of cabozantinib are included in Cost of goods sold for sales by us and as a reduction of Collaboration revenues for sales by Ipsen. Such royalties accruing to GSK were as follows (in thousands):



	Three Months Ended March 31,
	2019		2018
Royalties accruing to GSK	$	7,282	$	5,125

Genentech Collaboration

In December 2006, we out-licensed the development and commercialization of cobimetinib to Genentech pursuant to a worldwide collaboration agreement. Under the terms of the collaboration agreement, we developed cobimetinib through the determination of the maximum tolerated dose in a phase 1 clinical trial, and Genentech had the option to co-develop cobimetinib, an option that Genentech exercised, and in March 2009, we granted to Genentech an exclusive worldwide revenue-bearing license to cobimetinib, at which point Genentech became responsible for completing the phase 1 clinical trial and the subsequent clinical development.

In November 2015, the U.S. Food and Drug Administration approved cobimetinib, under the brand name COTELLIC, in combination with Genentech’s Zelboraf (vemurafenib) as a treatment for patients with BRAF V600E or V600K mutation-positive advanced melanoma. COTELLIC in combination with Zelboraf has also been approved in the European Union and multiple additional countries for use in the same indication. Profits on U.S. commercialization and Royalty revenues on ex-U.S. sales were as follows (in thousands):



	Three Months Ended March 31,
	2019		2018
Profits on U.S. commercialization	$	1,055	$	1,373
Royalty revenues on ex-U.S. sales	$	1,490	$	1,349