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Development Liability | 9 Months Ended
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Sep. 30, 2024
Research and Development [Abstract] |
Development Liability | 6. Development Liability In 2019, the Company entered into a development funding agreement (as amended, the “SFJ agreement”) with SFJ Pharmaceuticals Group (“SFJ”), under which SFJ agreed to provide funding to the Company to support the development of pegcetacoplan for the treatment of patients with PNH. Under the SFJ agreement, SFJ paid the Company an aggregate of $140.0 million between June 2019 and January 2020. Under the SFJ agreement, the Company granted a security interest to SFJ in all of its assets, excluding intellectual property and license agreements to which it is a party. In connection with the grant of the security interest, the Company agreed to certain affirmative and negative covenants, including restrictions on its ability to pay dividends, incur additional debt or enter into licensing transactions with respect to its intellectual property, other than specified types of licenses. Following regulatory approval for the use of systemic pegcetacoplan as a treatment for PNH by the FDA in May 2021 and by the European Medicines Agency in December 2021, the Company became obligated to pay SFJ an aggregate of $460.0 million in payments over the period from the time of each regulatory approval until the sixth anniversary of each regulatory approval. The Company paid SFJ a total of $94.0 million through March 31, 2024. From December 15, 2021 to the final annual payment due in December 2027, the development liability was accreted from its initial carrying amount to the total payment amount using the effective interest rate method over the remaining life of the SFJ agreement. The difference between the carrying amount and the total payment amount is presented as a discount to the development liability. The accretion is recorded as interest expense in the unaudited condensed consolidated statement of operations. In May 2024, the Company paid its remaining obligations under the SFJ agreement in full with $326.5 million of proceeds from the Sixth Street Financing Agreement (as defined below) (see Note 8). Upon such payment, SFJ released its security interest in the Company’s assets at that time. The Company concluded that the development liability was extinguished as of the payoff date, and the difference of $1.9 million between the reacquisition price of $326.5 million and the net carrying value of the development liability of $324.6 million was recorded as a loss on the extinguishment of the development liability in the unaudited condensed consolidated statement of operations for the nine month period ended September 30, 2024. The following table summarizes the development liability (in thousands):
|  | September 30, 2024 |  |  | December 31, 2023 |  |  | Effective Interest Rate |
Development liability |  | $ | — |  |  | $ | 366,000 |  |  |  | 7.91 | %
Less: Unamortized discount to development liability |  |  | — |  |  |  | (50,353 | ) |  |  |
Less: Current portion of development liability, net of discount |  |  | — |  |  |  | (75,830 | ) |  |  |
Total long-term development liability |  | $ | — |  |  | $ | 239,817 |  |  |  |
For the three months ended September 30, 2024 the Company did not record interest expense for the accretion of the development liability. For the nine months ended September 30, 2024, interest expense of $8.9 million was recorded for the accretion of the development liability. For the three and nine months ended September 30, 2023, interest expense of $6.4 million and $19.5 million, respectively, was recorded for the accretion of the development liability.

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