XML 28 R17.htm IDEA: XBRL DOCUMENT v3.23.2
Revenue
 6 Months Ended
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]  
Revenue

12. Revenue

Product Revenue, Net

Net product revenue was $0.5 million and $1.3 million for the three months ended June 30, 2023 and 2022, respectively, and $1.6 million and $2.0 million for the six months ended June 30, 2023 and 2022, respectively. Products are sold primarily to wholesalers and specialty pharmacies. Revenue is reduced from wholesaler list price at the time of recognition for expected chargebacks, rebates, discounts, incentives, and returns, which are referred to as gross to net (“GTN”) adjustments. These reductions are currently attributed to various commercial arrangements. Chargebacks and discounts are recognized as a reduction in accounts receivable or as accrued expenses based on their nature and settled through the issuance of credits to the customer or through cash payments to the customer, respectively. All other returns, rebates, and incentives are reflected as accrued expenses and settled through cash payments to the customer. Revenue attributed to sales to three wholesalers comprised 46%, 26%, and 25% of the Company’s gross revenue for the six months ended June 30, 2023.

 

The following table summarizes activity in each of the Company’s product revenue provision and allowance categories as of June 30, 2023 and 2022 (in thousands):

 

 

 

Discounts and Chargebacks (1)

 

 

Product Returns (2)

 

 

Rebates and Incentives (3)

 

 

Total

 

Balance as of December 31, 2022

 

$

255

 

 

$

73

 

 

$

1,213

 

 

$

1,541

 

Provision related to current period revenue

 

 

773

 

 

 

316

 

 

 

2,054

 

 

 

3,143

 

Changes in estimate related to prior period revenue

 

 

—

 

 

 

693

 

 

 

—

 

 

 

693

 

Credit/payments

 

 

(708

)

 

 

(74

)

 

 

(1,347

)

 

 

(2,129

)

Balance as of June 30, 2023

 

$

320

 

 

$

1,008

 

 

$

1,920

 

 

$

3,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discounts and Chargebacks (1)

 

 

Product Returns (2)

 

 

Rebates and Incentives (3)

 

 

Total

 

Balance as of December 31, 2021

 

$

249

 

 

$

21

 

 

$

1,110

 

 

$

1,380

 

Provision related to current period revenue

 

 

709

 

 

 

24

 

 

 

2,211

 

 

 

2,944

 

Changes in estimate related to prior period revenue

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Credit/payments

 

 

(516

)

 

 

—

 

 

 

(2,089

)

 

 

(2,605

)

Balance as of June 30, 2022

 

$

442

 

 

$

45

 

 

$

1,232

 

 

$

1,719

 

 

(1)

Discounts and chargebacks include fees for wholesaler fees, prompt pay and other discounts, and chargebacks. Discounts and chargebacks are deducted from gross revenue at the time revenues are recognized and are included as a reduction in accounts receivable or as an accrued expense based on their nature on the Company’s unaudited condensed consolidated balance sheet.

(2)

Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued expenses on the Company’s unaudited condensed consolidated balance sheet.

(3)

Rebates and incentives include rebates and co-pay program incentives. Provisions for rebates and incentives are deducted from gross revenues at the time revenues are recognized and are included in accrued expenses on the Company’s unaudited condensed consolidated balance sheets.

License Agreement with GSK

On March 30, 2023, the Company entered into a License Agreement with GSK. Pursuant to the terms of the License Agreement, the Company granted GSK an exclusive (even as to the Company and its affiliates), royalty-bearing, sublicensable license for the development, manufacture, and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in all countries other than Greater China and certain other countries already licensed to third parties (the “GSK Territory”). If the existing licenses granted to or agreements with third parties are terminated with respect to any country, GSK will have an exclusive first right to negotiate with the Company to add those additional countries to the GSK Territory. The parties closed the transactions contemplated by the License Agreement in May 2023.

The Company retains rights to all other assets, with GSK receiving a right of first negotiation (“ROFN”) to any other enfumafungin-derived compounds or products that the Company may control.

Under the terms of the License Agreement, the Company was entitled to a nonrefundable upfront payment of $90 million in May 2023. The Company is also eligible to receive potential:

•
regulatory approval milestone payments of up to $70 million;
•
commercial milestone payments of up to $115 million based on first commercial sale in invasive candidiasis (U.S./EU);
•
and sales milestone payments of up to $242.5 million based on annual net sales, with a total of $77.5 million to be paid upon achievement of multiple thresholds up through $200 million; a total of $65 million to be paid upon achievement of multiple thresholds between $300 million and $500 million; and $50 million to be paid at each threshold of $750 million and $1 billion.

The Company is responsible for the execution and costs of the ongoing clinical studies of ibrexafungerp but has the potential to receive up to $75.5 million in success-based development milestones, which are comprised of up to $65 million for the achievement of three interim milestones associated with the Company’s continued performance of the ongoing MARIO study and $10.5 million for the successful completion of the MARIO study. In June 2023, the Company earned a $25.0 million performance-based development milestone under the License Agreement. This milestone payment follows a development goal for the Phase 3 MARIO study for ibrexafungerp in IC as the Company continues executing ongoing ibrexafungerp trials.

In the case of each of the above milestones, such milestone events are defined in the License Agreement. GSK will also pay royalties based on cumulative annual sales to the Company in the mid-single digit to mid-teen range. These royalty rates are subject to reduction, including in the event of third-party licenses, entry of a generic product, or the expiration of licensed patents. A joint development committee was established between GSK and the Company to coordinate and review ongoing development activities of ibrexafungerp. Unless earlier terminated, the License Agreement will expire on a product-by-product and country-by-country basis at the end of the royalty term for such product in such country. The Company has the right to terminate the License Agreement upon an uncured material breach by, or bankruptcy of, GSK. GSK has the right to terminate the License Agreement at any time for convenience in its entirety or on a product-by-product and country-by-country basis, upon an uncured material breach by, or bankruptcy of, the Company, or for safety reasons.

The Company evaluated the License Agreement in accordance with ASC 606 as it includes a customer-vendor relationship as defined under ASC 606 and meets the criteria to be considered a contract. The Company assessed the terms of the License Agreement and identified the following performance obligations which include: (1) the license for the development, manufacture, and commercialization of ibrexafungerp, including the approved product BREXAFEMME, in the GSK Territory, (2) the research and development activities for the MARIO study, and (3) performance obligations for the remaining research and development activities for the ongoing clinical and preclinical studies of ibrexafungerp. For the three and six months ended June 30, 2023, the Company's product revenue, net comprised of sales of BREXAFEMME that the Company sold as principal given it maintains control of BREXAFEMME product until delivery to its wholesalers at which point control is transferred.

The Company considers the future potential development, regulatory, and commercial milestone payments as well as sales-based milestone and royalties to be variable consideration. The Company constrains variable consideration to the extent that it is probable that it will not result in a significant revenue reversal when the uncertainty associated with the variable consideration is subsequently resolved. The Company will recognize consideration related to sales-based milestone and royalties when the subsequent sales occur pursuant to the royalty exception under ASC 606 because the license is the predominant item to which the royalties or sales-based milestone relate.

The total transaction price is $136.1 million, which included the initial payment of $90.0 million and $45.0 million in success-based development milestones. Given the uncertain nature of these payments, the remaining potential development, regulatory, and commercial milestone payments from the License Agreement are not included in the transaction price as they are determined to be fully constrained as of June 30, 2023 under ASC 606. The Company will continue to reassess the transaction price, including estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

The Company allocated the $136.1 million transaction price based on relative stand-alone selling prices of each of the performance obligations as $130.1 million for the license, $4.8 million for the research and development activities for the MARIO study and $1.2 million for the remaining ongoing clinical and preclinical studies of ibrexafungerp. The Company developed the estimated standalone selling price for the license using a Monte Carlo valuation analysis and for the research and development activities, the Company's utilized the estimate of costs to be incurred to fulfill its obligations associated with the performance of the research and development activities, plus a reasonable margin. In developing this estimate for the license, the Company applied significant judgment in the determination of the significant assumptions relating to forecasted future cash flows and discount rates.

As of June 30, 2023, the Company provided all necessary information to GSK for it to benefit from the license under the license term. Accordingly, for the three months and six months ended June 30, 2023, the Company recognized $130.1 million in license revenue at a point in time upon the transfer of the license to GSK and completion of the initial technology transfer. As of June 30, 2023, the Company recognized a $25.0 million receivable and a $19.3 million contract asset associated with the success-based milestones associated with the ongoing clinical studies of ibrexafungerp. For a limited period of time, the Company continues to sell BREXAFEMME in the GSK Territory. The Company is the principal for these transactions under ASC 606 as the Company maintains control of the BREXAFEMME inventory that is then sells to its customers.

The Company recognized the revenue associated with the MARIO study and the remaining ongoing clinical and preclinical studies of ibrexafungerp over time using an input method. The input method is based on the actual costs incurred as a percentage of total budgeted costs towards satisfying the performance obligation as this method provides the most faithful depiction of the Company’s performance in transferring control of the services promised to GSK and represents the Company’s best estimate of the period of the obligation. For the three months and six months ended June 30, 2023, the Company recognized $0.5 million and $0.4 million of revenue the research and development activities associated with the MARIO study and the remaining ongoing clinical and preclinical studies of ibrexafungerp, respectively. As of June 30, 2023, there is $3.2 million and $1.1 million of current and long-term deferred revenue, respectively, which is expected to be recognized by the end of 2024.

License Agreement with Hansoh

In February 2021, the Company entered into an Exclusive License and Collaboration Agreement (the “Agreement”) with Hansoh (Shanghai) Health Technology Co., Ltd., and Jiangsu Hansoh Pharmaceutical Group Company Limited (collectively, “Hansoh”), pursuant to which the Company granted to Hansoh an exclusive license to research, develop and commercialize ibrexafungerp in the Greater China region, including mainland China, Hong Kong, Macau, and Taiwan (the “Territory”). The Company also granted to Hansoh a non-exclusive license to manufacture ibrexafungerp solely for development and commercialization in the Territory. For the three and six months ended June 30, 2023 and 2022, there was no license agreement revenue recognized associated with the Agreement given the variable consideration was fully constrained as of June 30, 2023 and 2022, respectively.