Revenues

12 Months Ended

Jan. 03, 2020

Revenue from Contract with Customer [Abstract]

REVENUES

Revenues consisted of the following (in thousands):



	Year Ended December 31,
	2019			2018			2017
Product revenues:
Gross product revenues	$	957,621		$	738,529		$	402,569
Discounts and allowances	(197,671		)	(119,250		)	(53,561		)
Net product revenues	759,950			619,279			349,008
Collaboration revenues:
License revenues	161,299			192,188			96,637
Research and development service revenues	49,965			39,501			8,737
Other collaboration revenues	(3,439		)	2,858			(1,905		)
Total collaboration revenues	207,825			234,547			103,469
Total revenues	$	967,775		$	853,826		$	452,477

Net product revenues, license revenues and research and development services revenues were recorded in accordance with Topic 606 during the years ended December 31, 2019 and 2018 and Topic 605 during the year ended December 31, 2017. During the periods presented in accordance with Topic 606, 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 includes the recognition of the portion of upfront payment milestones allocated to the transfer of intellectual property licenses for which it had become probable in the current period that the milestone would be achieved and a significant reversal of revenues would not occur, as well as royalty revenues. Research and development services revenues includes the recognition of deferred revenue for the portion of upfront and milestone payments that have been allocated to research and development services performance obligations, as well as development cost reimbursements earned under our collaboration agreements. Other collaboration revenues were recorded in accordance with Topic 808 for all periods presented and includes product supply revenues, net of product supply costs and the royalties we paid to GSK on sales by Ipsen Pharma SAS (Ipsen) of products containing cabozantinib. Profits on the U.S. commercialization of COTELLIC for the years ended December 31, 2019 and 2018 were also included other collaboration revenues, and losses on the U.S. commercialization of COTELLIC for the year ended December 31, 2017 were included in selling, general and administrative expenses

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



	Year Ended December 31,
	2019		2018		2017
CABOMETYX	$	733,421	$	599,946	$	324,000
COMETRIQ	26,529		19,333		25,008
Net product revenues	$	759,950	$	619,279	$	349,008

The percentage of total revenues by customer who individually accounted for 10% or more of our total revenues were as follows:



	Year Ended December 31,
	2019		2018		2017
Ipsen	16	%	21	%	15	%
Affiliates of CVS Health Corporation	15	%	13	%	16	%
Affiliates of McKesson Corporation	12	%	12	%	11	%
Affiliates of AmerisourceBergen Corporation	10	%	8	%	8	%
Accredo Health, Incorporated	9	%	9	%	11	%
Diplomat Specialty Pharmacy	5	%	9	%	18	%

Revenues by geographic region were as follows (in thousands):



	Year Ended December 31,
	2019		2018		2017
U.S.	$	770,244	$	632,927	$	367,906
Europe	152,771		182,879		69,792
Japan	44,760		38,020		14,779
Total revenues	$	967,775	$	853,826	$	452,477

Net product revenues are attributed to geographic regions based on the ship-to location. Collaboration revenues are attributed to geographic 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	75,543			13,017			31,040			119,600
Prior periods	(403		)	206			(153		)	(350		)
Payments and customer credits issued	(74,746		)	(11,980		)	(24,741		)	(111,467		)
Balance at December 31, 2018	2,322			3,038			11,916			17,276
Provision related to sales made in:
Current period	129,936			15,605			48,250			193,791
Prior periods	3,989			(111		)	2			3,880
Payments and customer credits issued	(128,733		)	(15,035		)	(44,946		)	(188,714		)
Balance at December 31, 2019	$	7,514		$	3,497		$	15,222		$	26,233

The reserves for chargebacks and discounts for prompt payment are recorded as a reduction of trade receivables, net and the remaining reserves are recorded as rebates and fees due to customers in the accompanying Consolidated Balance Sheets.

Contract Assets and Liabilities

We receive payments from our collaboration partners based on billing schedules established in each contract. Amounts are recorded as accounts receivable when our right to consideration is unconditional. We may also recognize revenue in advance of the contractual billing schedule and such amounts are recorded as a contract asset when recognized. Contract assets were $1.1 million and $0 as of December 31, 2019 and 2018, respectively, and are presented in prepaid expenses and other current assets in the accompanying Consolidated Balance Statements. We may be required to defer recognition of revenue for upfront and milestone payments until we perform our obligations under these arrangements, and such amounts are recorded as deferred revenue upon receipt or when due. Contract liabilities were $6.6 million and $15.9 million as of December 31, 2019 and 2018, respectively, and are presented in long-term portion of deferred revenue in the accompanying Consolidated Balance Sheets. For those contracts that have multiple performance obligations, contract assets and liabilities are reported on a net basis at the contract level. Significant changes in contract assets during the year ended December 31, 2019, as compared to 2018, were a result of the determination that it is probable that we will earn a $10.0 million milestone from Takeda Pharmaceutical Company Limited (Takeda) for the submission of a regulatory application in 2020 for cabozantinib as a treatment for patients with second-line HCC in Japan. This contract asset was recorded in prepaid expenses and other current assets in the accompanying Consolidated Balance Sheets, offset by the effect of reporting the Takeda contract asset and liability on a net basis.

During the years ended December 31, 2019 and 2018, we recognized $6.5 million and $8.7 million, respectively, in revenues that were included in the beginning deferred revenue balance for those years.

During the years ended December 31, 2019 and 2018, we recognized $161.2 million and $198.1 million, respectively, in revenues 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, Takeda and Daiichi Sankyo.

As of December 31, 2019, $63.1 million of the transaction price allocated to our performance obligations had not been satisfied. See “Note 3. Collaboration Agreements - Cabozantinib Commercial Collaborations - Performance Obligations and Transaction Prices for our Ipsen and Takeda Collaborations” for additional information about our performance obligations.