v3.8.0.1
Collaboration Agreements (Tables)
 3 Months Ended
Mar. 31, 2018
Revenue Recognition and Deferred Revenue [Abstract]  
Schedule of Milestone-Based Payments Associated With 2016 Agreement
We are eligible to receive the following milestone-based payments associated with the 2016 Agreement:
Program
 
Milestone
 
Amount
65/35 program in IO field
 
Specified clinical development event
 
$25.0 million
65/35 program in IO field
 
Specified regulatory milestone events
 
Up to $183.8 million
50/50 program in IO field
 
Specified clinical development event
 
$20.0 million
50/50 program in IO field
 
Specified regulatory milestone events
 
Up to $148.8 million
I&I field
 
Specified clinical development event
 
$25.0 million
I&I field
 
Specified regulatory milestone events
 
Up to $236.3 million
I&I field
 
Specified commercial milestone events
 
Up to $125.0 million
Schedule of Satisfied and Unsatisfied Performance Obligations
The satisfied and unsatisfied performance obligations at the time of the ASC 606 adoption, each of which are considered by us to be distinct within the context of the contract, their SSP, the method of recognizing the allocated consideration, and the period through which they are expected to be recognized are as follows:
Performance Obligations
 
SSP
 
No. of Performance Obligation(s)
 
Recognition Method
Fully satisfied at time of adoption
Licenses (1)
 
$
86.7
 million
 
4
 
Fully satisfied; recognized upon adoption of ASC 606
Research and development services (2) (3)
 
$
350.7
 million
 
10
 
Fully satisfied; recognized upon adoption of ASC 606
Partially satisfied at time of adoption
Research and development services (2) (3)
 
$
266.6
 million
 
6
 
Proportionally as services are delivered over the performance period, expected to be through September 2022 (4)
(1)
The SSP was developed by probability weighting multiple cash flow scenarios using the income approach. Our management estimates within the models include the expected, probability-weighted net profits from estimated future sales, an estimate of the direct cost incurred to generate future cash flows, a discount rate and other business forecast factors. There are significant judgments and estimates inherent in the determination of the SSP of these units of accounting. These judgments and estimates include assumptions regarding future operating performance, the timelines of the clinical trials and regulatory approvals, and other factors. If different reasonable assumptions are utilized, the SSP and revenue recognized would vary.
(2)
The SSP was developed using our management’s best estimate of the cost of obtaining these services at arm’s length from a third-party provider.
(3)
The SSP was developed using internal full time equivalent costs to support the development services.
(4)
We determined that recognizing revenue on a proportional basis using the ratio of effort incurred to date compared to the total estimated effort required to complete the performance obligation best depicts the satisfaction of our obligations under the Collaboration Agreements.
Schedule of Impact of New Accounting Pronouncements
the impact of the cumulative effect of the accounting changes upon the adoption of the standard (in thousands) is as follows:
 
December 31, 2017
 
Cumulative Effect
 
January 1, 2018
Deferred revenue – related party, current and net of current portions
$
163,640

 
$
(39,456
)
 
$
124,184

Accumulated deficit
(798,061
)
 
39,456

 
(758,605
)

The following tables summarize the effects of adopting ASC 606 on our unaudited condensed consolidated financial statements for the three months ended March 31, 2018 (in thousands, except per share data):
Condensed Consolidated Balance Sheets
 
March 31, 2018
 
Under Topic
606
 
Under Topic
605
 
Effect of
Change
Deferred revenue – related party
$
39,212

 
$
35,396

 
$
3,816

Deferred revenue, net of current portion – related party
81,831

 
122,060

 
(40,229
)
Accumulated deficit
(849,430
)
 
(885,843
)
 
36,413

Condensed Consolidated Statements of Operations
 
Three Months Ended March 31, 2018
 
Under Topic
606
 
Under Topic
605
 
Effect of
Change
Collaboration revenue – related party
$
7,345

 
$
9,977

 
$
(2,632
)
Research and development expense
78,224

 
77,813

 
411

Total operating expenses
102,774

 
102,363

 
411

Loss from operations
(94,012
)
 
(90,969
)
 
(3,043
)
Net loss
(90,825
)
 
(87,782
)
 
(3,043
)
Net loss per share – basic and diluted
(1.63
)
 
(1.58
)
 
(0.05
)
Condensed Consolidated Statements of Comprehensive Loss
 
Three Months Ended March 31, 2018
 
Under Topic
606
 
Under Topic
605
 
Effect of
Change
Net loss
$
(90,825
)
 
$
(87,782
)
 
$
(3,043
)
Comprehensive loss
(92,079
)
 
(89,036
)
 
(3,043
)
Condensed Consolidated Statements of Cash Flows
 
Three Months Ended March 31, 2018
 
Under Topic
606
 
Under Topic
605
 
Effect of
Change
Net loss
$
(90,825
)
 
$
(87,782
)
 
$
(3,043
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
Deferred revenue – related party
(3,141
)
 
(6,184
)
 
3,043

During the three months ended March 31, 2018, we recognized the following as collaboration revenue (in thousands):
 
Three Months Ended March 31, 2018
Performance Obligation
Under Topic
606
 
Under Topic
605
 
Effect of
Change
Collaboration revenue - related party
 
 
 
 
 
Research and development services
$
6,364

 
$
8,953

 
$
(2,589
)
Committee participations
—

 
43

 
(43
)
Reduction of research and development expenses
 
 
 
 
 
Development services
—

 
411

 
(411
)
Summary of Multiple-deliverable Arrangements Revenue
For the three months ended March 31, 2018 and 2017, we recognized the following collaboration revenue and reduction of research and development expenses related to such expenses (in thousands):
 
Three Months Ended March 31,
 
2018
 
2017
Collaboration revenue - related party
 
 
 
Commercialization activities
$
981

 
$
79

Reduction of research and development expenses
 
 
 
Research and development activities
—

 
14

During the three months ended March 31, 2017, we recognized as collaboration revenue the following non-contingent consideration allocated to each undelivered element (in thousands):
Undelivered Element
Revenue Recognized
On-going research and development services
$
10,387

Committee participations
42

Total collaboration revenue - related party
$
10,429

For the three months ended March 31, 2018 and 2017, we recognized the following totals of collaboration revenue and reduction of research and development expenses (in thousands):
 
Three Months Ended March 31,
 
2018
 
2017
Collaboration revenue - related party
$
7,345

 
$
10,508

Reduction of research and development expenses
—

 
2,776
Contract with Customer, Asset and Liability
During the three months ended March 31, 2018, we recognized the following as revenue due to changes in the contract asset and the contract liability balances (in thousands):
Amounts included in the contract liability at the beginning of the period
$
5,984

Performance obligations satisfied in previous periods
323

The following table presents changes in our contract assets and liabilities during the three months ended March 31, 2018 (in thousands):
 
December 31, 2017
 
Additions
 
Deductions
 
March 31, 2018
Contract assets (1)
 
 
 
 
 
 
 
Collaboration receivable – related party
$
2,448

 
$
3,512

 
$
(2,448
)
 
$
3,512

Royalty receivable – related party
1,222

 
1,417

 
(1,222
)
 
1,417

Contract liabilities (2)
 
 
 
 
 
 
 
Deferred revenue – related party, current and net of current portions
163,640

 
4,204

 
(46,801
)
 
121,043

(1)
Additions to contract assets relate to amounts billed to Celgene for reimbursable costs incurred by us during the reporting period. Deductions to contract assets relate to collection of receivables during the reporting period.
(2)
Additions to contract liabilities relate to consideration from Celgene during the reporting period. Deductions to contract liabilities relate to deferred revenue recognized as revenue during the reporting period and cumulative catch-up adjustment recognized upon adoption of ASC 606 on January 1, 2018.