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Liability Related to Sale of Future Revenues | 12 Months Ended
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Dec. 31, 2023
Liability Related to Sale of Future Royalties [Abstract] |
Liability Related to Sale of Future Revenues | 10. Liability Related to Sale of Future Revenues On November 4, 2022, the Company entered into a Revenue Interest Financing Agreement (the “RIFA”) with NQ Entity, L.P. (“NovaQuest”), pursuant to which the Company granted a percentage interest in the Company’s future revenues under the Astellas Agreements, for a consideration of $50.0 million (“Investment Amount”) before advisory fees. Effective as of November 2022, the Company sold to NovaQuest 22.5% of its drug product revenue and 10.0% (20.0% for fiscal year 2028 and thereafter) of its revenue from milestone payments under the Astellas Agreements. In November 2022, t he Company received $49.8 million from NovaQuest at an initial funding on November 17, 2022, representing the gross proceeds of $50.0 million (the “Initial Investment Amount”) net of initial issuance costs, and accounted for it as long-term debt based on the terms of the RIFA because the risks and rewards to NovaQuest are limited by the terms of the transaction. The related debt discount and transaction costs are amortized as interest expense based on the projected balance of the liability as of the beginning of each period. As payments are made to NovaQuest, the balance of the liability related to sale of future revenues is being effectively repaid over the life of the RIFA. The payments to NovaQuest are accounted for as a reduction of debt. The Company may prepay its obligations to NovaQuest in full at any time during the term of RIFA. The prepayment amount varies from $80.0 million to $125.0 million less any revenue interest payments made up to such prepayment date. Under the RIFA the Company shall pay to NovaQuest up to a specified maximum amount (“Payment Cap”) of (a) $100.0 million, if the payment is made on or before December 31, 2028; (b) $112.5 million, if the payment is made on or after January 1, 2029, but on or before December 31, 2029; or (c) $125.0 million, if the payment is made after January 1, 2030. After January 1, 2028, if the product (as defined) is not commercialized for a consecutive twelve-month period, then, the payments owed under the RIFA by the Company to NovaQuest for each fiscal year shall be the greater of: (i) the amount which would otherwise be due pursuant to revenue interest payments terms; or (ii) $10.0 million. Before December 31, 2028, if the sum of all payments under the RIFA paid to NovaQuest, does not equal or exceed $62.5 million, then the Company shall pay NovaQuest the difference of these two amounts by no later than March 1, 2029. If, by no later than December 31, 2030, the sum of all payments under the RIFA paid to NovaQuest does not equal or exceed $125.0 million, then the Company shall pay NovaQuest the difference of these two amounts by no later than March 1, 2031. NovaQuest will retain this entitlement until it has reached the Payment Cap, at which point 100% of such revenue interest on future global net sales of Astellas will revert to the Company. Over the course of the RIFA, the effective interest rate is affected by the amount and timing of drug product revenue and revenue from milestone payments recognized, the changes in the timing of forecasted drug product revenue and revenue from milestone payments, and the timing of the Company’s payments to NovaQuest. On a quarterly basis, the Company reassesses the expected total revenue and the timing of such revenue, recalculates the amortization of debt discount and transactions costs and effective interest rate, and adjusts the accounting prospectively as needed. The total debt discount and transaction costs of $1.7 million, is amortized as interest expense based on the projected balance of the liability as of the beginning of each period. The Company estimated an effective annual interest rate of approximately 16.03% and 19.67% for the years ended December 31, 2023 and 2022, respectively. As payments are made to NovaQuest, the balance of the liability related to sale of future revenues is being effectively repaid over the life of the RIFA. The table below shows the activity of the liability related to sale of future revenues for the year ended December 31, 2023:
|  | Year Ended December 31, 2023 |
Liability related to sale of future revenues - beginning balance |  | $ | 49,333 |
Interest expense recognized |  |  | 7,734 |
Liability related to sale of future revenues - ending balance |  |  | 57,067 |
Less: Current portion classified to accrued and other current liabilities |  |  | (5,654 | )
Liability related to sale of future revenues, non-current |  | $ | 51,413 |
During the years ended December 31, 2023 and 2022, the Company recognized, under Astellas Agreements, drug product revenue of $18.8 million and $11.1 million, respectively. In addition, during the year ended December 31, 2022, the Company recognized, under Astellas Agreements, license revenue of $22.6 million and development revenue of $2.4 million related to a $25.0 million regulatory milestone. See Note 3, Collaboration Agreements, License Agreement and Revenue, for details. During the years ended December 31, 2023 and 2022, the Company recognized the related non-cash interest expense of $7.7 million and $1.0 million, respectively. Based on the current estimates of drug product revenue and revenue from milestone payments under the Astellas Agreements, and taking into the consideration of the terms discussed above, the Company anticipates to reach a Payment Cap up to $125.0 million by 2031.

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