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Collaboration Agreements, License Agreement and Revenues | 9 Months Ended
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Sep. 30, 2021
Organization Consolidation And Presentation Of Financial Statements [Abstract] |
Collaboration Agreements, License Agreement and Revenues |
2. | Collaboration Agreements, License Agreement and Revenues
Astellas Agreements Japan Agreement In June 2005, the Company entered into a collaboration agreement with Astellas Pharma Inc. (“Astellas”) for the development and commercialization (but not manufacture) of roxadustat for the treatment of anemia in Japan (“Japan Agreement”). Under this agreement, Astellas paid license fees and other consideration totaling $40.1 million (such amounts were fully received as of February 2009). Under the Japan Agreement, the Company is also eligible to receive from Astellas an aggregate of approximately $132.5 million in potential milestone payments, comprised of (i) up to $22.5 million in milestone payments upon achievement of specified clinical and development milestone events (such amounts were fully received as of July 2016), (ii) up to $95.0 million in milestone payments upon achievement of specified regulatory milestone events, and (iii) up to approximately $15.0 million in milestone payments upon the achievement of specified commercial sales milestone. The Japan Agreement also provides for tiered payments based on net sales of product (as defined) in the low 20% range of the list price published by Japan’s Ministry of Health, Labour and Welfare, adjusted for certain elements, after commercial launch. The aggregate amount of consideration received through September 30, 2021 totals $105.1 million, excluding drug product revenue that is discussed separately below. In 2018, FibroGen and Astellas entered into an amendment to the Japan Agreement that allows Astellas to manufacture roxadustat drug product for commercialization in Japan (the “Japan Amendment”). Under this amendment, FibroGen would continue to manufacture and supply roxadustat active pharmaceutical ingredient (“API”) to Astellas for the roxadustat commercial purposes in Japan. The commercial terms of the Japan Agreement relating to the transfer price for roxadustat for commercial use remain substantially the same, reflecting an adjustment for the manufacture of drug product by Astellas rather than FibroGen. The related drug product revenue, as described in details under Drug Product Revenue section below, was $2.1 million for the nine months ended September 30, 2021. Europe Agreement In April 2006, the Company entered into a separate collaboration agreement with Astellas for the development and commercialization of roxadustat for the treatment of anemia in Europe, the Middle East, the Commonwealth of Independent States and South Africa (“Europe Agreement”). Under the terms of the Europe Agreement, Astellas paid license fees and other upfront consideration totaling $320.0 million (such amounts were fully received as of February 2009). The Europe Agreement also provides for additional development and regulatory approval milestone payments up to $425.0 million, comprised of (i) up to $90.0 million in milestone payments upon achievement of specified clinical and development milestone events (such amounts were fully received as of 2012), (ii) up to $335.0 million in milestone payments upon achievement of specified regulatory milestone events. Under the Europe Agreement, Astellas committed to fund 50% of joint development costs for Europe and North America, and all territory-specific costs. The Europe Agreement also provides for tiered payments based on net sales of product (as defined) in the low 20% range. During the third quarter of 2021, the European Commission approved EVRENZO® (roxadustat) for the treatment of adult patients with symptomatic anemia associated with CKD. Astellas has launched EVRENZO in Germany, the United Kingdom, the Netherlands, and Austria. This approval triggered a total of $120.0 million milestone payable to the Company by Astellas under the Europe Agreement. Accordingly, the consideration of $120.0 million associated with these milestones was included in the transaction price and allocated to performance obligations under the Europe Agreement, all of which was recognized as revenue during the third quarter of 2021 from performance obligations satisfied. The aggregate amount of consideration received under the Europe Agreement through September 30, 2021 totals $660.0 million, excluding drug product revenue that is discussed separately below. Under the Europe Agreement, Astellas has an option to purchase roxadustat bulk drug product in support of commercial supplies. During the first quarter of 2021, the Company entered into an Astellas EU Supply Agreement (“EU Supply Agreement”) under the Europe Agreement with Astellas to define general forecast, order, supply and payment terms for Astellas to purchase roxadustat bulk drug product from FibroGen in support of commercial supplies. The Company shipped bulk drug product to Astellas as pre-commercial supply for process validation purposes during the first quarter of 2021. The Company continued to record the consideration of $11.8 million from this shipment as deferred revenue as of September 30, 2021, as described in details under Drug Product Revenue section below. AstraZeneca Agreements U.S./Rest of World (“RoW”) Agreement Effective July 30, 2013, the Company entered into a collaboration agreement with AstraZeneca for the development and commercialization of roxadustat for the treatment of anemia in the U.S. and all other countries in the world, other than China, not previously licensed under the Astellas Europe and Astellas Japan Agreements (“U.S./RoW Agreement”). It also excludes China, which is covered by a separate agreement with AstraZeneca described below. Under the terms of the U.S./RoW Agreement, AstraZeneca paid upfront, non-contingent, non-refundable and time-based payments totaling $374.0 million (such amounts were fully received as of June 2016). Under the U.S./RoW Agreement, the Company is also eligible to receive from AstraZeneca an aggregate of approximately $875.0 million in potential milestone payments, comprised of (i) up to $65.0 million in milestone payments upon achievement of specified clinical and development milestone events (such amounts were fully received as of April 2020), (ii) up to $325.0 million in milestone payments upon achievement of specified regulatory milestone events, (iii) up to $160.0 million in milestone payments related to activity by potential competitors and (iv) up to approximately $325.0 million in milestone payments upon the achievement of specified commercial sales events. The aggregate amount of consideration received under the U.S./RoW Agreement through September 30, 2021 totals $439.0 million, excluding drug product revenue that is discussed separately below. In 2020, the Company entered into Master Supply Agreement under the U.S./RoW Agreement with AstraZeneca (“Master Supply Agreement”) to define general forecast, order, supply and payment terms for AstraZeneca to purchase roxadustat bulk drug product from FibroGen in support of commercial supplies. The Company shipped bulk drug product to AstraZeneca as commercial supply during 2020, and the first and second quarter of 2021. In August 2021, the FDA Issued a complete response letter (“CRL”) regarding roxadustat’s New Drug Application for the treatment of anemia due to CKD in adult patients, stating that it could not be approved in its present form. The Company evaluated the impact of these developments in revising its estimates of variable consideration associated with drug product revenue and updated the estimated transaction price, and continued to record $11.2 million as deferred revenue as of September 30, 2021. See details under Drug Product Revenue section below. China Agreement Effective July 30, 2013, the Company (through its subsidiaries affiliated with China) entered into the China Agreement (“China Agreement”). Under the terms of the China Agreement, AstraZeneca agreed to pay upfront consideration totaling $28.2 million (such amounts were fully received in 2014). Under the China Agreement, the Company is also eligible to receive from AstraZeneca an aggregate of approximately $348.5 million in potential milestone payments, comprised of (i) up to $15.0 million in milestone payments upon achievement of specified clinical and development milestone events, (ii) up to $146.0 million in milestone payments upon achievement of specified regulatory milestone events, and (iii) up to approximately $187.5 million in milestone payments upon the achievement of specified commercial sales and other events. The China Agreement is structured as a 50/50 profit or loss share (as defined), which was amended under the China Amendment discussed below in the third quarter of 2020, and provides for joint development costs (including capital and equipment costs for construction of the manufacturing plant in China), to be shared equally during the development period. The aggregate amount of such consideration received for milestone and upfront payments through September 30, 2021 totals $77.2 million. China Amendment In July 2020, FibroGen China Anemia Holdings, Ltd., FibroGen Beijing, and FibroGen International (Hong Kong) Limited (collectively “FibroGen China”) and AstraZeneca (together with FibroGen China, the “Parties”) entered into the China Amendment, effective July 1, 2020, relating to the development and commercialization of roxadustat in China. While the responsibilities of the Parties under the China Agreement remain largely the same, certain changes were made. Under the China Amendment, in September 2020, FibroGen Beijing and AstraZeneca completed the establishment of a jointly owned entity, Falikang, which performs roxadustat distribution, as well as conduct sales and marketing through AstraZeneca. Under the China Amendment, the interim period is defined as the period from April 1, 2020 to the time when Falikang is fully operational. Falikang became fully operational in January 2021. The calculation for profit or loss share related to sales of roxadustat in China has changed for the period from April 1, 2020 onwards. With effect from April 1, 2020, the Parties have changed the method under which commercial expenses incurred by AstraZeneca are calculated and billed. AstraZeneca’s co-promotion expenses for their sales and marketing efforts are now subject to a cap of a percentage of net sales. Once AstraZeneca has been fully reimbursed for their sales and marketing costs under the cap, AstraZeneca will bill the co-promotion expenses based on actual costs on a prospective basis. In addition, the China Amendment has allowed for a higher cost of manufacturing incurred by FibroGen Beijing to be included in the profit or loss share calculation, subject to an annual cap, among other changes. Since Falikang became fully operational in January 2021, substantially all direct roxadustat product sales to distributors in China are made by Falikang, while FibroGen Beijing continues to sell roxadustat product directly in a few provinces in China. FibroGen Beijing manufactures and supplies commercial product to Falikang based on a gross transfer price, which is adjusted for the estimated profit share. In addition, AstraZeneca now bills the co-promotion expenses to Falikang and to FibroGen Beijing, respectively, for its services provided to the respective entity. Development costs continue to be shared 50/50 between the Parties. During the three and nine months ended September 30, 2021, the Company recognized $10.3 million and $32.5 million, respectively, of net product revenue from the sales to Falikang, as described in details under Product Revenue, Net section below. In addition to sales to Falikang, during the three and nine months ended September 30, 2021, the Company recognized $3.1 million and 9.7 million, respectively, of net product revenue from sales directly to distributors in a few provinces in China, as described as direct sales under Product Revenue, Net section below. Eluminex Agreement In July 2021, FibroGen exclusively licensed to Eluminex Biosciences (Suzhou) Limited (“Eluminex”) global rights to its investigational biosynthetic cornea derived from recombinant human collagen Type III. Under the terms of the agreement with Eluminex (the “Eluminex Agreement”), Eluminex will make an $8.0 million upfront payment to FibroGen. In addition, FibroGen may receive up to a total of $64.0 million in future manufacturing, clinical, regulatory, and commercial milestone payments for the biosynthetic cornea program, as well as $36.0 million in commercial milestones for the first recombinant collagen III product that is not the biosynthetic cornea. FibroGen will also be eligible to receive mid single-digit to low double-digit royalties based upon worldwide net sales of cornea products, and low single-digit to mid single-digit royalties based upon worldwide net sales of other recombinant human collagen type III products that are not cornea products. The Company accounted for this agreement under ASC 606 and identified one performance obligation at inception of the agreement related to the granting of the license rights to the investigational biosynthetic cornea derived from recombinant human collagen Type III. The Company based its assessment on the determination that Eluminex can benefit from the granted license on its own by developing and commercializing the underlying product using its own resources. All components of the transaction price in the agreement were allocated to the single performance obligation. Additionally, the Company will be responsible for supplying the cornea product at 110% of its product manufacturing costs until its manufacturing technology is fully transferred to Eluminex. Supply of the cornea product will be managed by a separate agreement and is considered a separate performance obligation. During the third quarter of 2021, the $8.0 million upfront license payment was recognized as license revenue for the performance obligation satisfied. This amount was recorded as an unbilled contract asset as of September 30, 2021 in the prepaid expenses and other current assets in the condensed consolidated balance sheets. The remaining future variable consideration related to future manufacturing, clinical, regulatory milestone payments as described above were fully constrained because the Company cannot conclude that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur, given the inherent uncertainties of success with these future milestones. For commercial milestones and royalties, the Company determined that the license is the predominant item to which the royalties or sales-based milestones relate and revenue will be recognized when the corresponding milestones and royalties are earned. License Revenue and Development Revenue Recognized Under the Collaboration Agreements and License Agreement Amounts recognized as license revenue and development revenue under the Japan Agreement with Astellas were as follows (in thousands):
|  |  |  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
Agreement |  | Performance Obligation |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Japan |  | License revenue |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
|  | Development revenue |  | $ | 66 |  |  | $ | 86 |  |  | $ | 245 |  |  | $ | 413 |
The transaction price related to consideration received and accounts receivable has been allocated to each of the following performance obligations under the Japan Agreement with Astellas, along with any associated deferred revenue as follows (in thousands):
Japan Agreement |  | Cumulative Revenue Through September 30, 2021 |  |  | Deferred Revenue at September 30, 2021 |  |  | Total Consideration Through September 30, 2021 |
License |  | $ | 100,347 |  |  | $ | — |  |  | $ | 100,347 |
Development revenue |  |  | 16,595 |  |  |  | — |  |  |  | 16,595 |
Total license and development revenue |  | $ | 116,942 |  |  | $ | — |  |  | $ | 116,942 |
The revenue recognized under the Japan Agreement for the three months ended September 30, 2021 included immaterial revenue resulting from changes to estimated variable consideration in the current period relating to performance obligations satisfied or partially satisfied in previous periods. The Company does not expect material variable consideration from estimated future co-development billing beyond the development period in the transaction price related to the Japan Agreement. Amounts recognized as license revenue and development revenue under the Europe Agreement with Astellas were as follows (in thousands):
|  |  |  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
Agreement |  | Performance Obligation |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Europe |  | License revenue |  | $ | 108,434 |  |  | $ | — |  |  | $ | 108,434 |  |  | $ | — |
|  | Development revenue |  | $ | 14,061 |  |  | $ | 4,651 |  |  | $ | 20,138 |  |  | $ | 13,827 |
The transaction price related to consideration received and accounts receivable has been allocated to each of the following performance obligations under the Europe Agreement with Astellas, along with any associated deferred revenue as follows (in thousands):
Europe Agreement |  | Cumulative Revenue Through September 30, 2021 |  |  | Deferred Revenue at September 30, 2021 |  |  | Total Consideration Through September 30, 2021 |
License |  | $ | 596,385 |  |  | $ | — |  |  | $ | 596,385 |
Development revenue |  |  | 269,100 |  |  |  | — |  |  |  | 269,100 |
Total license and development revenue |  | $ | 865,485 |  |  | $ | — |  |  | $ | 865,485 |
The revenue recognized under the Europe Agreement for the three months ended September 30, 2021 included an increase in revenue of $0.2 million resulting from changes to estimated variable consideration. The remainder of the transaction price related to the Europe Agreement includes $15.6 million of variable consideration from estimated future co-development billing and is expected to be recognized over the remaining development service period. Amounts recognized as revenue under the U.S./RoW and China Agreement with AstraZeneca were as follows (in thousands):
|  |  |  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
Agreement |  | Performance Obligation |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
U.S. / RoW and China |  | License revenue |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
|  | Development revenue |  |  | 11,970 |  |  |  | 15,220 |  |  |  | 39,939 |  |  |  | 43,525 |
|  | China performance obligation |  | $ | — |  |  | $ | 706 |  |  | $ | — |  |  | $ | 1,300 |
The transaction price related to consideration received and accounts receivable has been allocated to each of the following performance obligations under the U.S./RoW Agreement and China Agreement with AstraZeneca, along with any associated deferred revenue as follows (in thousands):
U.S. / RoW and China Agreements |  | Cumulative Revenue Through September 30, 2021 |  |  | Deferred Revenue at September 30, 2021 |  |  | Total Consideration Through September 30, 2021 |
License |  | $ | 341,844 |  |  | $ | — |  |  | $ | 341,844 |
Co-development, information sharing & committee services |  |  | 594,713 |  |  |  | 1,428 |  |  |  | 596,141 |
China performance obligation * |  |  | 32,495 |  |  |  | 160,267 |  |  |  | 192,762 |
Total license and development revenue |  | $ | 969,052 |  |  | $ | 161,695 |  | ** | $ | 1,130,747 |
* | China performance obligation revenue is recognized as product revenue, as described in details under Product Revenue, Net section below.
** | Contract assets and liabilities related to rights and obligations in the same contract are recorded net on the consolidated balance sheets. As of September 30, 2021, deferred revenue included $154.7 million related to the U.S./RoW and China Agreement, which represents the net of $161.7 million of deferred revenue presented above and a $7.0 million unbilled co-development revenue under the China Amendment with AstraZeneca.
The revenue recognized under the U.S./RoW Agreement for the three months ended September 30, 2021 included a reduction in revenue of $0.8 million resulting from changes to estimated variable consideration. The remainder of the transaction price related to the U.S./RoW Agreement and China Agreement includes $35.3 million of variable consideration from estimated future co-development billing and is expected to be recognized over the remaining development service period, except for amounts allocated to the China performance obligation. The amount allocated to the U.S./RoW Agreement is expected to be recognized over the remaining development service period. The amount allocated to the China performance obligation is expected to be recognized as the Company transfers control of the commercial products to Falikang. Amounts recognized as revenue under the Eluminex were as follows (in thousands):
|  |  |  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
Agreement |  | Performance Obligation |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Eluminex |  | License revenue |  | $ | 8,000 |  |  | $ | — |  |  | $ | 8,000 |  |  | $ | — |
Product Revenue, Net Product revenue, net from the sales of roxadustat commercial product in China was as follows (in thousands):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Direct Sales: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross revenue |  | $ | 3,249 |  |  | $ | 27,900 |  |  | $ | 10,908 |  |  | $ | 53,105 |
Discounts and rebates |  |  | (133 | ) |  |  | (5,209 | ) |  |  | (1,314 | ) |  |  | (9,721 | )
Sales returns |  |  | (2 | ) |  |  | (8 | ) |  |  | 86 |  |  |  | (53 | )
Direct sales revenue, net |  |  | 3,114 |  |  |  | 22,683 |  |  |  | 9,680 |  |  |  | 43,331 |
Sales to Falikang: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross transfer price |  |  | 31,179 |  |  |  | — |  |  |  | 82,294 |  |  |  | — |
Profit share |  |  | (12,090 | ) |  |  | — |  |  |  | (31,726 | ) |  |  | — |
Net transfer price |  |  | 19,089 |  |  |  | — |  |  |  | 50,568 |  |  |  | — |
Increase in deferred revenue |  |  | (8,761 | ) |  |  | — |  |  |  | (18,073 | ) |  |  | — |
Sales to Falikang revenue, net |  |  | 10,328 |  |  |  | — |  |  |  | 32,495 |  |  |  | — |
Total product revenue, net |  | $ | 13,442 |  |  | $ | 22,683 |  |  | $ | 42,175 |  |  | $ | 43,331 |
Direct Sales Product revenue from direct roxadustat product sales to distributors in China is recognized in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those products, net of various sales rebates and discounts. The total discounts and rebates were $0.1 million and $5.2 million for the three months ended September 30, 2021 and 2020, and $1.3 million and $9.7 million for the nine months ended September 30, 2021 and 2020, respectively. The discounts and rebates primarily consisted of the contractual sales rebate calculated based on the stated percentage of gross sales by each distributor in the distribution agreement entered between FibroGen and each distributor. In addition, the discounts and rebates for the three and nine months ended September 30, 2020 primarily included the non-key account hospital listing award calculated based on eligible non-key account hospital listing to date achieved by each distributor with certain requirements met during the period. The rebates and discounts that the Company’s pharmaceutical distributors have earned are eligible to be applied against future sales orders, limited to certain maximums until such rebates and discounts are exhausted. These rebates and discounts are recorded as contract liabilities at the time they become eligible in the same period that the related revenue is recorded. Due to the Company’s legal right to offset, at each balance sheet date, the rebates and discounts are presented as reductions to gross accounts receivable from the distributor, or as a current liability to the distributor to the extent that the total amount exceeds the gross accounts receivable or when the Company expects to settle the discount in cash. The Company’s legal right to offset is calculated at the individual distributor level. The following table includes a roll-forward of the contract liabilities (in thousands):
|  | Balance at December 31, 2020 |  |  | Additions |  |  | Deduction |  |  | Currency Translation and Other |  |  | Balance at September 30, 2021 |
Product revenue - Direct sales - contract liabilities |  | $ | (15,137 | ) |  | $ | (944 | ) |  | $ | 5,913 |  |  | $ | (167 | ) |  | $ | (10,335 | )
As of September 30, 2021 and December 31, 2020, the total contract liabilities were $10.3 million and $15.1 million, which were included in accrued and other current liabilities in the condensed consolidated balance sheet. The rebates and discounts reflected as reductions to gross accounts receivable for direct sales was $0.8 million and $0.5 million as of September 30, 2021 and December 31, 2020, respectively. Sales to Falikang – China Performance Obligation Since Falikang became fully operational in January 2021, substantially all direct roxadustat product sales to distributors in China are made by Falikang. FibroGen Beijing manufactures and supplies commercial product to Falikang. The net transfer price for FibroGen Beijing’s product sales to Falikang is based on a gross transfer price, which is adjusted to account for the 50/50 profit share for the period. The roxadustat sales to Falikang marked the beginning of the Company’s China performance obligation under the Company’s agreements with AstraZeneca. Product revenue is based on the transaction price of the China performance obligation. Revenue is recognized when control of the product is transferred to Falikang, in an amount that reflects the allocation of the transaction price to the performance obligation satisfied during the reporting period. Any net transfer price in excess of the revenue recognized is added to the deferred balance to date, and will be recognized over future periods as the performance obligations are satisfied. During the three and nine months ended September 30, 2021, following updates to its estimates, the Company deferred $8.8 million and $18.1 million, respectively, from the net transfer price to Falikang, which was included in the related deferred revenue of the China performance obligation. The following table includes a roll-forward of the related deferred revenue that is considered as a contract liability (in thousands):
|  | Balance at December 31, 2020 |  |  | Additions |  |  | Recognized as Revenue |  |  | Balance at September 30, 2021 |
Product revenue - AstraZeneca China performance obligation - deferred revenue |  | $ | (137,338 | ) |  | $ | (55,424 | ) |  | $ | 32,495 |  |  | $ | (160,267 | )
Deferred revenue includes amounts allocated to the China performance obligation under the AstraZeneca arrangement as revenue recognition associated with this unit of accounting is tied to the commercial launch of the products within China and to when the control of the manufactured commercial products is transferred to AstraZeneca. As of September 30, 2021, approximately $8.5 million of the deferred revenue related to the China unit of accounting was included in short-term deferred revenue, which represents the amount of deferred revenue associated with the China unit of accounting that is expected to be recognized within the next 12 months, associated with the commercial sales in China. The reductions to gross accounts receivable related to product revenue to Falikang was $23.1 million as of September 30, 2021. Drug Product Revenue Drug product revenue from commercial-grade API or bulk drug product sales to AstraZeneca and Astellas was as follows (in thousands):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Astellas |  | $ | — |  |  | $ | (3,957 | ) |  | $ | 2,056 |  |  | $ | 4,281 |
AstraZeneca |  |  | — |  |  |  | 4,643 |  |  |  | (2,224 | ) |  |  | 4,643 |
Drug product revenue |  | $ | — |  |  | $ | 686 |  |  | $ | (168 | ) |  | $ | 8,924 |
During the second quarter of 2021, the Company shipped bulk drug product to AstraZeneca as commercial supply under the terms of the Master Supply Agreement. Based on the CRL issued by the FDA in August 2021, the Company evaluated the impact of these developments in revising its estimates of variable consideration associated with drug product revenue. As a result, the Company updated the estimated transaction price, and continued to record $11.2 million as deferred revenue as of September 30, 2021. During the first six months of 2021, the Company updated its estimate of variable consideration and recorded an adjustment of $2.1 million to the drug product revenue related to the API shipments fulfilled under the terms of the Japan Amendment with Astellas in 2018. Specifically, the change in estimated variable consideration was based on the API held by Astellas at the period end, adjusted to reflect the changes in the estimated bulk product strength mix intended to be manufactured by Astellas, estimated cost to convert the API to bulk product tablets, and estimated yield from the manufacture of bulk product tablets, among others. During the first quarter of 2021, the Company shipped bulk drug product from process validation supplies for commercial purposes under the terms of the Europe Agreement and the EU Supply Agreement with Astellas. The Company continued to record the consideration of $11.8 million from this shipment as deferred revenue as of September 30, 2021, due to a high degree of uncertainty associated with the final consideration. The deferred revenue will be recognized as and when the uncertainty is resolved. The following table includes a roll-forward of the above-mentioned deferred revenue s that are considered as contract liabilit ies related to drug product (in thousands):
|  | Balance at December 31, 2020 |  |  | Additions |  |  | Recognized as Revenue |  |  | Balance at September 30, 2021 |
Astellas - Japan Agreement |  | $ | — |  |  | $ | (1,974 | ) |  | $ | — |  |  | $ | (1,974 | )
Astellas - Europe Agreement |  |  | (5,984 | ) |  |  | (11,759 | ) |  |  | — |  |  |  | (17,743 | )
AstraZeneca - U.S. Agreement |  |  | — |  |  |  | (11,171 | ) |  |  | — |  |  |  | (11,171 | )
Drug product revenue - deferred revenue |  | $ | (5,984 | ) |  | $ | (24,904 | ) |  | $ | — |  |  | $ | (30,888 | )

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