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Revenue from Contracts with Customers
 9 Months Ended
Sep. 30, 2023
Revenue from Contract with Customer [Abstract]  
Revenue from Contracts with Customers

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

 

Product Sales, Net

The Company’s product sales, net consist of sales in the U.S. of VIVITROL, ARISTADA and ARISTADA INITIO and, following its commercial launch in October 2021, LYBALVI, primarily to wholesalers, specialty distributors and pharmacies. During the three and nine months ended September 30, 2023 and 2022, the Company recorded product sales, net, as follows:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(In thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

VIVITROL

 

$

99,305

 

 

$

96,534

 

 

$

298,035

 

 

$

277,493

 

ARISTADA and ARISTADA INITIO

 

 

81,834

 

 

 

75,719

 

 

 

244,320

 

 

 

222,826

 

LYBALVI

 

 

50,683

 

 

 

27,127

 

 

 

135,671

 

 

 

61,116

 

Total product sales, net

 

$

231,822

 

 

$

199,380

 

 

$

678,026

 

 

$

561,435

 

 

Manufacturing and Royalty Revenues

During the three and nine months ended September 30, 2023 and 2022, the Company recorded manufacturing and royalty revenues from its collaboration arrangements as follows:

 

 

 

Three Months Ended September 30, 2023

 

 

Nine Months Ended September 30, 2023

 

(In thousands)

 

Manufacturing Revenue

 

 

Royalty Revenue

 

 

Total

 

 

Manufacturing Revenue

 

 

Royalty Revenue

 

 

Total

 

Long-acting INVEGA products(1)

 

$

—

 

 

$

76,109

 

 

$

76,109

 

 

$

—

 

 

$

410,910

 

 

$

410,910

 

VUMERITY

 

 

9,733

 

 

 

24,828

 

 

 

34,561

 

 

 

32,751

 

 

 

62,979

 

 

 

95,730

 

RISPERDAL CONSTA

 

 

14,732

 

 

 

151

 

 

 

14,883

 

 

 

30,049

 

 

 

957

 

 

 

31,006

 

Other

 

 

16,157

 

 

 

7,403

 

 

 

23,560

 

 

 

48,160

 

 

 

22,082

 

 

 

70,242

 

 

$

40,622

 

 

$

108,491

 

 

$

149,113

 

 

$

110,960

 

 

$

496,928

 

 

$

607,888

 

 

 

 

 

Three Months Ended September 30, 2022

 

 

Nine Months Ended September 30, 2022

 

(In thousands)

 

Manufacturing Revenue

 

 

Royalty Revenue

 

 

Total

 

 

Manufacturing Revenue

 

 

Royalty Revenue

 

 

Total

 

Long-acting INVEGA products(1)

 

$

—

 

 

$

26,737

 

 

$

26,737

 

 

$

—

 

 

$

90,439

 

 

$

90,439

 

VUMERITY

 

 

5,584

 

 

 

20,666

 

 

 

26,250

 

 

 

22,629

 

 

 

60,386

 

 

 

83,015

 

RISPERDAL CONSTA

 

 

8,380

 

 

 

1,848

 

 

 

10,228

 

 

 

32,529

 

 

 

5,516

 

 

 

38,045

 

Other

 

 

3,265

 

 

 

(13,539

)

 

 

(10,274

)

 

 

26,472

 

 

 

5,466

 

 

 

31,938

 

 

$

17,229

 

 

$

35,712

 

 

$

52,941

 

 

$

81,630

 

 

$

161,807

 

 

$

243,437

 

 

(1)
“Long-acting INVEGA products”: INVEGA SUSTENNA/XEPLION (paliperidone palmitate), INVEGA TRINZA/TREVICTA (paliperidone palmitate) and INVEGA HAFYERA/BYANNLI (paliperidone palmitate).

In October 2022 and November 2022, an arbitration panel found that the Company must return to Acorda Therapeutics, Inc. (“Acorda”) $16.5 million (inclusive of prejudgment interest and administrative fees) and $1.8 million (inclusive of prejudgment interest), respectively, previously paid by Acorda under a license agreement between the Company and Acorda. These amounts represented a portion of the royalty revenue paid to the Company by Acorda since July 2020 related to AMPYRA. The Company paid Acorda the aggregate $18.3 million in the fourth quarter of 2022. In addition, during the three months ended June 30, 2022, the Company had recorded $3.2 million of royalty revenue related to AMPYRA as the Company believed that it had met the necessary revenue recognition criteria under the FASB Accounting Standards Codification 606, Revenue from Contracts with Customers. However, as a result of the arbitration ruling, the Company reversed the $3.2 million as the panel found that the Company was no longer entitled to be paid those royalties. During the three months ended September 30, 2022, the Company recorded both the $18.3 million in repayments and the $3.2 million reversal as reversals of royalty revenue within “Manufacturing and royalty revenue” in the accompanying consolidated statements of operations and comprehensive loss. As a result of the arbitration ruling, the Company has no contractual obligation to manufacture and supply AMPYRA or contractual right to receive future manufacturing or royalty revenue related to AMPYRA. Refer to Note 16, Commitments and Contingent Liabilities within the “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q for information regarding additional legal proceedings related to the arbitration with Acorda.

In November 2021, the Company received notice of partial termination of an exclusive license agreement with Janssen Pharmaceutica N.V., a subsidiary of Johnson & Johnson (“Janssen Pharmaceutica”). Under this license agreement, the Company provided Janssen Pharmaceutica with rights to, and know-how, training and technical assistance in respect of, the Company’s small particle pharmaceutical compound technology, known as NanoCrystal technology, which was used to develop the Long-acting INVEGA products. When the partial termination became effective in February 2022, Janssen Pharmaceutica ceased paying royalties related to sales of INVEGA SUSTENNA, INVEGA TRINZA and INVEGA HAFYERA. Accordingly, the Company ceased recognizing royalty revenue related to sales of these products in February 2022. In April 2022, the Company commenced binding arbitration proceedings related to, among other things, Janssen Pharmaceutica’s partial termination of this license agreement and Janssen Pharmaceutica’s royalty and other obligations under the agreement. On May 31, 2023, the arbitral tribunal (the “Tribunal”) in the arbitration proceedings issued a final award (the “Final Award”) which concluded the arbitration proceedings. The Final Award provided, among other things, that the Company was due back royalties of $195.4 million, inclusive of $8.1 million in late-payment interest related to 2022 U.S. net sales of the Long-acting INVEGA products, which amount the Company received from Janssen Pharmaceutica in the second quarter of 2023, and is entitled to 2023 and future royalty revenues from Janssen Pharmaceutica related to net sales of INVEGA SUSTENNA through August 20, 2024, INVEGA TRINZA through the second quarter of 2030 (but no later than May 2030 when the license agreement expires) and INVEGA HAFYERA through May 2030 (when the license agreement expires).

Following issuance of the Final Award, the Company recognized royalty revenues related to the back royalties noted above and resumed recognizing royalty revenue related to ongoing U.S. sales of the Long-acting INVEGA products. During the nine months ended September 30, 2023, the Company recorded $410.9 million in royalty revenue from sales of the Long-acting INVEGA products, including $195.4 million related to back royalties and associated interest related to net sales of the Long-acting INVEGA products in 2022.

 

Contract Assets

Contract assets include unbilled amounts resulting from sales under certain of the Company’s manufacturing contracts where revenue is recognized over time. The amounts included in the contract assets table below are classified as “Current assets” in the accompanying condensed consolidated balance sheets, as they relate to manufacturing processes that are completed in ten days to eight weeks.

Total contract assets at September 30, 2023 were as follows:

 

(In thousands)

 

Contract Assets

 

Contract assets at December 31, 2022

 

$

8,929

 

Additions

 

 

12,881

 

Transferred to receivables, net

 

 

(19,044

)

Contract assets at September 30, 2023

 

$

2,766

 

 

Contract Liabilities

 

Contract liabilities consist of contractual obligations related to deferred revenue. At September 30, 2023 and December 31, 2022, $3.3 million and $6.8 million of the contract liabilities, respectively, were classified as “Contract liabilities–short-term” in the accompanying condensed consolidated balance sheets and $1.7 million and $3.9 million of the contract liabilities, respectively, were classified as “Other long-term liabilities” in the accompanying condensed consolidated balance sheets.

Total contract liabilities at September 30, 2023 were as follows:

 

(In thousands)

 

Contract Liabilities

 

Contract liabilities at December 31, 2022

 

$

10,701

 

Additions

 

 

(931

)

Amounts recognized into revenue

 

 

(4,794

)

Contract liabilities at September 30, 2023

 

$

4,976