Collaboration Agreements And In-Licensing Arrangements

3 Months Ended

Apr. 02, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

COLLABORATION AGREEMENTS AND IN-LICENSING ARRANGEMENTS

We have established multiple collaborations with leading pharmaceutical companies for the commercialization and further development of our cabozantinib franchise. Additionally, we have entered into several research collaborations and in-licensing arrangements to further enhance our early-stage pipeline and expand our ability to discover, develop and commercialize novel therapies with the goal of providing new treatment options for cancer patients and their physicians. We also entered into other collaborations with leading pharmaceutical companies 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, 2020, or as further described below, for additional information on each of our collaboration agreements and in-licensing arrangements.

Cabozantinib Collaborations

Ipsen Collaboration

In February 2016, we entered into a collaboration agreement with Ipsen for the commercialization and further development of cabozantinib. Under the terms of the collaboration agreement, as amended, Ipsen received exclusive commercialization rights for current and potential future cabozantinib indications outside of the U.S. and Japan. We have also agreed to collaborate with Ipsen on the development of cabozantinib for current and potential future indications. The parties’ efforts are governed through a joint steering committee and appropriate subcommittees established to guide and oversee the collaboration’s operation and strategic direction; provided, however, that we retain final decision-making authority with respect to cabozantinib’s ongoing development.

Revenues under the collaboration agreement with Ipsen were as follows (in thousands):


	Three Months Ended March 31,
		2021		2020
License revenues		$	22,451	$	17,949
Collaboration services revenues		11,355		11,087
Total		$	33,806	$	29,036

As of March 31, 2021, $44.8 million of the transaction price was allocated to our research and development services performance obligations that has not yet been satisfied.

Takeda Collaboration

In January 2017, we entered into a collaboration and license agreement with Takeda, which was subsequently amended effective March 2018, May 2019 and September 2020 to, among other things, modify the amount of reimbursements we are eligible to receive for costs associated with our required pharmacovigilance activities, modify the amount of milestones we are eligible to receive, and modify certain cost sharing obligations related to the Japan-specific development costs associated with CONTACT-01 and CONTACT-02 clinical trials. Pursuant to this collaboration and license agreement, as amended, 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. The operation and strategic direction of the parties’ collaboration is governed through a joint executive committee and appropriate subcommittees.

Revenues under the collaboration agreement with Takeda were as follows (in thousands):


	Three Months Ended March 31,
		2021		2020
License revenues		$	1,301	$	—
Collaboration services revenues		4,135		1,069
Total		$	5,436	$	1,069

As of March 31, 2021, $42.5 million of the transaction price was allocated to our research and development services performance obligations that has not yet been satisfied.

GSK & Royalty Pharma

In October 2002, we established a product development and commercialization collaboration agreement with GSK, that required us to pay a 3% royalty to GSK on the worldwide net sales of any product incorporating cabozantinib by us and our collaboration partners. As disclosed in Note 2, we received notification that, effective January 1, 2021, Royalty Pharma acquired from GSK all rights, title and interest in royalties on net product sales containing cabozantinib for non-U.S. markets for the full term of the royalty and for the U.S. market through September 2026, after which time U.S. royalties will revert back to GSK. Royalties earned by GSK and Royalty Pharma in connection with our sales of cabozantinib are included in cost of goods sold and as a reduction of collaboration services revenues for sales by our collaboration partners. Such royalties were $10.1 million and $8.1 million during the three months ended March 31, 2021 and 2020, respectively.

Genentech Collaboration

In December 2006, we out-licensed the development and commercialization of cobimetinib to Genentech under a worldwide collaboration agreement. In November 2015, the U.S. Food and Drug Administration (FDA) approved cobimetinib, under the brand name COTELLIC, in combination with Genentech’s ZELBORAF® (vemurafenib) for the treatment of 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. In July 2020, the FDA also approved COTELLIC for use in combination with ZELBORAF and TECENTRIQ® (atezolizumab) for the treatment of patients with BRAF V600 mutation-positive advanced melanoma in previously untreated patients. License revenues under the collaboration agreement with Genentech were as follows (in thousands):


	Three Months Ended March 31,
		2021		2020
Profits on U.S. commercialization		$	1,794	$	1,407
Royalty revenues on ex-U.S. sales		$	951	$	1,309

Research Collaborations and In-Licensing Arrangements

In the first quarter of 2021, we entered into additional licensing and collaboration agreements in support of our preclinical pipeline with Adagene, Inc. (Adagene) and WuXi Biologics Ireland Ltd (WuXi Bio). As part of these agreements we made aggregate upfront payments of $14.0 million in exchange for licenses to develop and commercialize products. We committed to make payments to Adagene for potential future development milestones of $55.0 million, regulatory milestones of $200.0 million, and commercial milestones of $525.0 million, each in the aggregate, as well as royalties on future net product sales. We also committed to make payments to WuXi Bio for potential future development milestones of $18.5 million, regulatory milestones of $30.0 million, and commercial milestones of $80.0 million, each per product, as well as royalties on future net product sales.