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Novartis Collaboration and License Agreement (the "Novartis Agreement") | 12 Months Ended
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Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Novartis Collaboration and License Agreement (the "Novartis Agreement") | Novartis Collaboration and License Agreement (the "Novartis Agreement") In 2019, we entered into the Novartis Agreement, for the development and commercialization of our preclinical product candidate, PLN-1474 and up to three additional integrin research targets. PLN-1474 is an internally discovered small molecule selective inhibitor of integrin αvβ1, currently being developed for the treatment of liver fibrosis associated with nonalcoholic steatohepatitis (“NASH”). Pursuant to the agreement, we received an upfront, non-refundable license fee of $50.0 million and were eligible to receive additional payments of $416.0 million contingent upon achievement of specified research, development, regulatory and commercial events and royalties on world-wide net sales thereafter. Additionally, Novartis agreed to fund up to $19.6 million associated with research and development services for PLN-1474 and up to $13.4 million for research and development services on the integrin research targets. We assessed the Novartis Agreement in accordance with ASC 606 and determined that Novartis is a customer and identified the following performance obligations: (1) to provide worldwide license rights to PLN-1474, (2) to provide research and development services for PLN-1474, (3) to provide non-exclusive license rights to integrin research targets, and (4) to provide research and development services on integrin research targets. We determined that the license to PLN-1474 was functional intellectual property and distinct as Novartis is capable to benefit from the license on its own or together with other resources that are readily available, and the research and development services we promise to deliver are not transformative in nature. Additionally, we concluded that the non-exclusive license rights to integrin research targets were not distinct in the context of the arrangement as the promised research and development services on integrin research targets were expected to significantly modify the license and Novartis could not benefit from the non-exclusive license without such services. Therefore, the non-exclusive license rights and research and development services on integrin research targets were considered a single performance obligation. We determined the transaction price of the PLN-1474 research and development services and integrin target research and development services was $20.0 million and $13.4 million, respectively, as of December 31, 2021, and the performance obligations associated with the aggregate unrecognized transaction price of $2.0 million would be satisfied in 2022. As of December 31, 2021, variable consideration associated with specified research and development milestones totaling $391 million have been constrained from the transaction prices but remain eligible for achievement. We are utilizing a cost-based input method to measure proportional performance and to calculate the corresponding amount of revenue to recognize. We believe this is the best measure of progress because other measures do not reflect how we transfer the performance obligation to our counterparty. In applying the cost-based input method of revenue recognition, we use actual costs incurred relative to budgeted costs to fulfill the performance obligation. These costs consist primarily of third-party contract costs and internal full-time equivalent effort. A cost-based input method of revenue recognition requires management to make estimates of costs to complete the performance obligations. The cumulative effect of revisions to estimated costs to complete the performance obligations will be recorded in the period in which changes are identified and amounts can be reasonably estimated. A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods. During the year ended December 31, 2021, we recognized revenue of $7.6 million which consisted of revenue generated from research and development services. During the year ended December 31, 2020, we recognized revenue of $41.8 million, which consisted of $25.0 million from the achievement of the first patient dosing milestone of the Novartis agreement in the first quarter of 2020 and $16.8 million of revenue generated from research and development services performed during the year. During the year ended December 31, 2019, Company recognized revenue of $50.0 million related to the license fee and $7.1 million from research and development services. As of December 31, 2021 and 2020, there was a receivable of $2.0 million and $9.3 million, respectively, related to the Novartis Agreement. There were no contract assets or contract liabilities as of December 31, 2021 and 2020.

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