License and Collaboration Agreement with Helsinn	9 Months Ended
Sep. 30, 2021
License And Collaboration Agreement [Abstract]
License and Collaboration Agreement with Helsinn	10. License and Collaboration Agreement with Helsinn On March 29, 2021, QED entered into a license and collaboration agreement with Helsinn Healthcare S.A. (“HHC”) and Helsinn Therapeutics (U.S.), Inc. (“HTU”, collectively with HHC, “Helsinn,” and together with QED, the “Parties”) (the “QED-Helsinn License and Collaboration Agreement”), pursuant to which QED granted to HHC exclusive licenses to develop, manufacture and commercialize QED’s product candidate, infigratinib, in oncology and all other indications except achondroplasia or any other skeletal dysplasias, worldwide, except for the People’s Republic of China, Hong Kong and Macau (“Greater China”), and under which QED will receive a co-exclusive license to co-commercialize infigratinib in the United States in the licensed indications. Under this agreement, Helsinn is likewise entitled to a right of first negotiation with respect to specific territories subject to the occurrence of a contingent event. As part of this agreement, QED is also required to transfer inventory within the transitional period, as described in the QED-Helsinn License and Collaboration Agreement. The effectiveness of the transactions contemplated under this agreement was subject to specified conditions, including the expiration or early termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). The waiting period under the HSR Act ended on April 16, 2021 and the QED-Helsinn License and Collaboration Agreement became effective as of that date. Under the terms of the QED-Helsinn License and Collaboration Agreement, QED is eligible to receive payments totaling up to approximately $2.45 billion in the aggregate, including over $100.0 million in upfront, regulatory and launch milestone payments, and the remainder subject to the achievement of specified commercial milestones, as well as tiered royalties in the high teens as a percentage of adjusted net sales by Helsinn of the licensed products sold worldwide, outside of the United States and Greater China. Upon approval by the U.S. Food and Drug Administration (“FDA”), QED and HTU will co-commercialize infigratinib in the licensed indications in the United States and will share profits and losses on a 50:50 basis. In May 2021, we received such FDA approval for an oncology indication in the United States and effective as of that date, sharing of profits and losses commenced. QED and Helsinn will share global, excluding Greater China, research and development costs for infigratinib in the licensed indications at a rate of 40% for QED and 60% for Helsinn. The QED-Helsinn License and Collaboration Agreement is considered to be within the scope of ASC 808 as the parties are active participants and are exposed to the risks and rewards of the collaborative activity, and partially within the scope of ASC 606, for the units of account that Helsinn is identified as a customer. For the units of account in the collaboration arrangement that do not represent a vendor-customer relationship, including the performance of research and development and commercialization services, we determined that ASC 606 is not appropriate to apply by analogy and applied a reasonable and rational accounting policy election that faithfully depicts the transfer of services to the collaboration partner over the estimated performance period. Reimbursement payments from Helsinn associated with profit and cost sharing provisions are recognized as the related expense is incurred and classified as an offset to the underlying expense and excluded from the transaction price. We evaluated the terms of the QED-Helsinn License and Collaboration Agreement and identified Helsinn as a customer with the following two distinct performance obligations: (1) exclusive licenses to develop, manufacture, and commercialize the underlying product, and (2) transfer of inventory within the transitional supply period. We consider the future potential regulatory and launch milestones to be variable consideration. We constrain variable consideration to the extent that it is not probable that it will result in a significant revenue reversal when the uncertainty associated with the variable consideration is subsequently resolved. We recognize consideration relating to sales-based milestones and royalties when the subsequent sales occur. We determined the initial transaction price for the QED-Helsinn License and Collaboration Agreement to be $46.0 million, comprising of $20.0 million nonrefundable upfront license fee, $1.0 million for sale of certain existing inventory, and $25.0 million milestone for the first launch of the first indication of infigratinib in the U.S. The remaining future potential milestone payments were not included in the transaction price as they were determined to be fully constrained under ASC 606. We determined that the achievement of such regulatory and launch milestones are contingent upon success in future clinical trials and regulatory approvals, which are not within our control and are uncertain at this stage. We expect that the royalty arrangements and commercial-based milestones will be recognized when the sales occur or the milestones are achieved pursuant to the sales-based royalty exception under ASC 606-10-55-65 because the license is the predominant item to which the royalties or commercial-based milestones relate. We will re-evaluate the transaction price at each reporting period and as uncertain events are resolved or other changes in circumstances occur. Based on the distinct performance obligations under the QED-Helsinn License and Collaboration Agreement, we allocated the $46.0 million transaction price based on relative stand-alone selling prices of each of our performance obligations as $44.4 million for the licenses and $1.6 million for the transfer of inventory. For the delivery of the licenses, we based the stand-alone selling price on a discounted cash flow approach and considered several factors including, but not limited to, forecasted revenue and costs, development timelines, discount rate and probabilities of clinical and regulatory success. For the transfer of inventory, we based the stand-alone selling price on the actual costs incurred by us to purchase or manufacture the inventory as well as the average compensation of employees estimated to be incurred over the performance period. As of September 30, 2021, we have provided all necessary information to Helsinn for it to benefit from the license under the license term and have completed the transfer of inventory. During the three and nine months ended September 30, 2021, we recognized $1.6 million and $46.0 million, respectively, in license revenue under these units of account accounted for under ASC 606. There were no outstanding receivables from Helsinn related to these units of accounts as of September 30, 2021. For the unit of account that is within the scope of ASC 808 relating to research and development costs, we have recognized Helsinn’s share of research and development expenses of $9.6 million and $28.2 million as a reduction of research and development expenses for the three and nine months ended September 30, 2021, respectively. Total receivables from Helsinn relating to this unit of account accounted for under ASC 808 amounted to $7.7 million as of September 30, 2021 and are shown as part of “Receivable from licensing and collaboration agreements” in the condensed consolidated balance sheets. Following the FDA approval of TRUSELTIQTM (infigratinib) in May 2021, we accounted for Helsinn’s share of the co-commercialization loss of $2.6 million and $6.8 million as a reduction to selling, general and administrative expenses for the three and nine months ended September 30, 2021, respectively.

License and Collaboration Agreement with Helsinn

9 Months Ended

Sep. 30, 2021

License And Collaboration Agreement [Abstract]

License and Collaboration Agreement with Helsinn

10.

License and Collaboration Agreement with Helsinn

On March 29, 2021, QED entered into a license and collaboration agreement with Helsinn Healthcare S.A. (“HHC”) and Helsinn Therapeutics (U.S.), Inc. (“HTU”, collectively with HHC, “Helsinn,” and together with QED, the “Parties”) (the “QED-Helsinn License and Collaboration Agreement”), pursuant to which QED granted to HHC exclusive licenses to develop, manufacture and commercialize QED’s product candidate, infigratinib, in oncology and all other indications except achondroplasia or any other skeletal dysplasias, worldwide, except for the People’s Republic of China, Hong Kong and Macau (“Greater China”), and under which QED will receive a co-exclusive license to co-commercialize infigratinib in the United States in the licensed indications. Under this agreement, Helsinn is likewise entitled to a right of first negotiation with respect to specific territories subject to the occurrence of a contingent event. As part of this agreement, QED is also required to transfer inventory within the transitional period, as described in the QED-Helsinn License and Collaboration Agreement. The effectiveness of the transactions contemplated under this agreement was subject to specified conditions, including the expiration or early termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). The waiting period under the HSR Act ended on April 16, 2021 and the QED-Helsinn License and Collaboration Agreement became effective as of that date.

Under the terms of the QED-Helsinn License and Collaboration Agreement, QED is eligible to receive payments totaling up to approximately $2.45 billion in the aggregate, including over $100.0 million in upfront, regulatory and launch milestone payments, and the remainder subject to the achievement of specified commercial milestones, as well as tiered royalties in the high teens as a percentage of adjusted net sales by Helsinn of the licensed products sold worldwide, outside of the United States and Greater China. Upon approval by the U.S. Food and Drug Administration (“FDA”), QED and HTU will co-commercialize infigratinib in the licensed indications in the United States and will share profits and losses on a 50:50 basis. In May 2021, we received such FDA approval for an oncology indication in the United States and effective as of that date, sharing of profits and losses commenced. QED and Helsinn will share global, excluding Greater China, research and development costs for infigratinib in the licensed indications at a rate of 40% for QED and 60% for Helsinn.

The QED-Helsinn License and Collaboration Agreement is considered to be within the scope of ASC 808 as the parties are active participants and are exposed to the risks and rewards of the collaborative activity, and partially within the scope of ASC 606, for the units of account that Helsinn is identified as a customer. For the units of account in the collaboration arrangement that do not represent a vendor-customer relationship, including the performance of research and development and commercialization services, we determined that ASC 606 is not appropriate to apply by analogy and applied a reasonable and rational accounting policy election that faithfully depicts the transfer of services to the collaboration partner over the estimated performance period. Reimbursement payments from Helsinn associated with profit and cost sharing provisions are recognized as the related expense is incurred and classified as an offset to the underlying expense and excluded from the transaction price.

We evaluated the terms of the QED-Helsinn License and Collaboration Agreement and identified Helsinn as a customer with the following two distinct performance obligations: (1) exclusive licenses to develop, manufacture, and commercialize the underlying product, and (2) transfer of inventory within the transitional supply period.

We consider the future potential regulatory and launch milestones to be variable consideration. We constrain variable consideration to the extent that it is not probable that it will result in a significant revenue reversal when the uncertainty associated with the variable consideration is subsequently resolved. We recognize consideration relating to sales-based milestones and royalties when the subsequent sales occur.

We determined the initial transaction price for the QED-Helsinn License and Collaboration Agreement to be $46.0 million, comprising of $20.0 million nonrefundable upfront license fee, $1.0 million for sale of certain existing inventory, and $25.0 million milestone for the first launch of the first indication of infigratinib in the U.S.

The remaining future potential milestone payments were not included in the transaction price as they were determined to be fully constrained under ASC 606. We determined that the achievement of such regulatory and launch milestones are contingent upon success in future clinical trials and regulatory approvals, which are not within our control and are uncertain at this stage. We expect that the royalty arrangements and commercial-based milestones will be recognized when the sales occur or the milestones are achieved pursuant to the sales-based royalty exception under ASC 606-10-55-65 because the license is the predominant item to which the royalties or commercial-based milestones relate. We will re-evaluate the transaction price at each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Based on the distinct performance obligations under the QED-Helsinn License and Collaboration Agreement, we allocated the $46.0 million transaction price based on relative stand-alone selling prices of each of our performance obligations as $44.4 million for the licenses and $1.6 million for the transfer of inventory. For the delivery of the licenses, we based the stand-alone selling price on a discounted cash flow approach and considered several factors including, but not limited to, forecasted revenue and costs, development timelines, discount rate and probabilities of clinical and regulatory success. For the transfer of inventory, we based the stand-alone selling price on the actual costs incurred by us to purchase or manufacture the inventory as well as the average compensation of employees estimated to be incurred over the performance period.

As of September 30, 2021, we have provided all necessary information to Helsinn for it to benefit from the license under the license term and have completed the transfer of inventory. During the three and nine months ended September 30, 2021, we recognized $1.6 million and $46.0 million, respectively, in license revenue under these units of account accounted for under ASC 606. There were no outstanding receivables from Helsinn related to these units of accounts as of September 30, 2021.

For the unit of account that is within the scope of ASC 808 relating to research and development costs, we have recognized Helsinn’s share of research and development expenses of $9.6 million and $28.2 million as a reduction of research and development expenses for the three and nine months ended September 30, 2021, respectively. Total receivables from Helsinn relating to this unit of account accounted for under ASC 808 amounted to $7.7 million as of September 30, 2021 and are shown as part of “Receivable from licensing and collaboration agreements” in the condensed consolidated balance sheets.

Following the FDA approval of TRUSELTIQTM (infigratinib) in May 2021, we accounted for Helsinn’s share of the co-commercialization loss of $2.6 million and $6.8 million as a reduction to selling, general and administrative expenses for the three and nine months ended September 30, 2021, respectively.