Collaborations and License Agreements

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Collaborations and License Agreements

Collaborations and License AgreementsThe Company has collaborations or license agreements with the following companies: United Therapeutics Corporation, or United Therapeutics, Everest Medicines Limited, Eisai Co., Ltd. and Eisai Inc., or collectively, Eisai, Boehringer Ingelheim International GmbH, or Boehringer Ingelheim, Beacon Discovery, Inc., or Beacon Discovery, and Aristea Therapeutics, Inc., or Aristea.

In the following table, revenue is disaggregated by major customers and timing of revenue recognition, in thousands:

	Year Ended December 31,
Customers	2021		2020
Eisai	$	—	$	262
Other	54		57
Total	$	54	$	319
	Year Ended December 31,
Timing of revenue recognition	2021		2020
Revenue recognized over time	$	—	$	262
Revenue recognized at a point in time	54		57
Total	$	54	$	319

Aristea Therapeutics, Inc.

In July 2021, the Company entered into a strategic collaboration and option agreement to advance the clinical development of RIST4721, an oral CXCR2 antagonist being developed by Aristea Therapeutics, Inc. (“Aristea”) for the treatment of palmoplantar pustulosis (“PPP”) and other neutrophil-mediated diseases.

Under the terms of the agreement, the Company paid $60.0 million upfront to Aristea and invested $10.0 million in Aristea’s Series B preferred stock, both of which were paid in July 2021. In return, Aristea granted the Company an exclusive option to acquire Aristea, including rights to all CXCR2 programs, upon completion of the Phase 2b study of RIST4721 in PPP. The agreement also provided a framework during the option period for the companies to jointly explore the development of additional neutrophil-mediated diseases, including hidradenitis suppurativa and inflammatory bowel disease. The Company accounted for the transaction as an asset acquisition and expensed the total $70.0 million payment to Aristea as acquired in-process research and development in the consolidated statement of operations during the year ended December 31, 2021, because: i) the Company is not the primary beneficiary and does not have a controlling financial interest in Aristea, ii) Aristea does not meet the definition of a business from an accounting perspective, and iii) the asset has no alternative future use.

United Therapeutics Corporation

In November 2018, the Company entered into an exclusive license agreement with United Therapeutics. Under this agreement, the Company granted United Therapeutics an exclusive, worldwide, royalty-bearing license to develop, manufacture and commercialize ralinepag in any formulation. This transaction was completed in January 2019. United Therapeutics is responsible for all development, manufacturing and commercialization of the licensed products globally. In connection with this transaction, the Company incurred transaction fees of approximately $17.0 million, of which $14.6 million was incurred in 2019 and is presented as transaction costs in the accompanying consolidated statements of operations.

The Company received an upfront payment of $800.0 million under the agreement in the first quarter of 2019. The Company is also eligible to receive up to an aggregate of $400.0 million in regulatory milestone payments related to ralinepag, consisting of a payment of $150.0 million upon first marketing approval of an oral formulation of ralinepag in a major non-US market, and a payment of $250.0 million upon US marketing approval of an inhaled formulation of ralinepag to treat pulmonary arterial hypertension, as well as low double-digit, tiered royalties on net sales of ralinepag products, subject to certain adjustments for third party license payments.

The promised goods and services under this agreement are accounted for as a single performance obligation consisting of a research, development and commercialization license. The Company’s performance obligation under this agreement was satisfied upon the closing of the transaction in January 2019, and accordingly, the estimated total transaction price of the agreement of $800.0 million was recognized as revenue at the commencement of this agreement in 2020. The future potential milestone payments were excluded from the estimated total transaction price as they are considered constrained. Under the royalty exception in ASC 606 for licensed intellectual property, the Company does not include any variable amounts related to sales-based royalties in the transaction price until the later of when the sales occur or the performance obligation is satisfied or partially satisfied.

Everest

In December 2018, the Company and Everest entered into an exclusive agreement, or the Everest Agreement, to conduct joint development for the ralinepag and etrasimod programs. Under the Everest Agreement, the Company granted Everest an exclusive, royalty-bearing license to develop and commercialize ralinepag (in any formulation) and etrasimod (in oral formulations), in mainland China, Taiwan, Hong Kong, Macau and South Korea, or collectively, the Territories. Everest is generally responsible for development and commercialization of the licensed products in the Territories and may participate in the portion of the Company’s global clinical trials that is conducted in the Territories. In January 2019, the Company and Everest amended the Everest Agreement by entering into two separate agreements, one for each development program with the terms identical to the original Everest Agreement. Under the agreement with United Therapeutics described above, the Company assigned all its rights and obligations with respect to the ralinepag program under the Everest Agreement, to United Therapeutics.

The Company is also eligible to receive up to an aggregate of $110.0 million in success milestones in case of full commercial success of etrasimod products. The Company is also eligible to receive tiered royalties on net sales of etrasimod products in the Territories.

The promised goods and services under the Everest Agreement are accounted for as a single performance obligation consisting of a development and commercialization license. As of December 31, 2021, all remaining future potential milestone payments were excluded from the estimated total transaction price as they are considered constrained.

For the year ended December 31, 2019, the Company recognized revenues of $5.0 million from the Everest Agreement. The Company did not recognize revenue from the Everest Agreement during the years ended December 31, 2021 and 2020.

Eisai

In December 2016, the Company amended and restated the terms of the marketing and supply agreement for lorcaserin with Eisai by entering into a Transaction Agreement and a Supply Agreement (collectively, the Eisai Agreement). Under the Transaction Agreement, Eisai acquired an exclusive royalty-bearing license or transfer of intellectual property to global commercialization and manufacturing rights to lorcaserin, including in the territories retained by the Company under the prior agreement, with control over global development and commercialization decisions. Eisai is responsible for all lorcaserin development expenses in the future. The Company also assigned to Eisai its rights under the commercial lorcaserin distribution agreements with Ildong Pharmaceutical Co., Ltd., or Ildong, for South Korea; CY Biotech Company Limited, or CYB, for Taiwan; and Teva Pharmaceuticals Ltd.’s Israeli subsidiary, Abic Marketing Limited, or Teva, for Israel.

Until March 31, 2018, when the Company sold the Manufacturing Operations, including the assignment of the Supply Agreement, to Siegfried, it manufactured lorcaserin at its manufacturing facility in Zofingen, Switzerland.

Lorcaserin was approved for marketing in the US, and in certain other territories, for the indication of weight management. On February 13, 2020, the FDA issued a drug safety communication announcing that it requested Eisai voluntarily withdraw lorcaserin from the US market based on the FDA’s analysis of data from the Cardiovascular and Metabolic Effects of Lorcaserin in Overweight and Obese Patients – Thrombolysis in Myocardial Infarction 61 (CAMELLIA-TIMI 61) study, and that Eisai has submitted a request to voluntarily withdraw lorcaserin from the US market. On September 30, 2020, Eisai announced that, after consulting with the FDA, it is continuing the lorcaserin expanded access program and has initiated a Phase 3 clinical study of lorcaserin in patients with Dravet syndrome, a severe type of epilepsy characterized by prolonged seizures that begin in the first year of life.

In October 2020, the Company entered into a Royalty Purchase Agreement with Longboard pursuant to which Longboard purchased from the Company the right to receive all milestone payments, royalties, interest and other payments relating to net sales of lorcaserin owed or otherwise payable by Eisai.

The Company believes that Eisai is solely responsible for any expenses and losses associated with product liability claims, except the Company and Eisai share 50% of losses for any alleged defective manufacturing of lorcaserin that was manufactured by us prior to entering into the Transaction Agreement.

For the years ended December 31, 2020 and 2019, the Company recorded royalty revenues of $0.3 million and $(1.1) million, respectively related to the Transaction Agreement.

Boehringer Ingelheim International GmbH

In December 2015, the Company and Boehringer Ingelheim entered into a collaboration and license agreement, or Boehringer Ingelheim Agreement, under which the Company and Boehringer Ingelheim conduct joint research to identify drug candidates targeting an undisclosed G-protein-coupled receptor, or GPCR, that belongs to the group of orphan central nervous system receptors. Under the Boehringer Ingelheim Agreement, the Company granted Boehringer Ingelheim exclusive rights to its internally discovered, novel compounds and intellectual property for an orphan CNS receptor. The agreement grants Boehringer Ingelheim exclusive worldwide rights to develop, manufacture and commercialize products resulting from the collaboration.

In December 2018 and October 2019, the Company earned a milestone payment of $3.5 million and $1.5 million, respectively, upon Boehringer Ingelheim’s initiation of preclinical development of a first and an additional compound.

The Company is also eligible to receive up to an aggregate of $246.0 million (of which the first $7.0 million is also payable to Beacon) in additional success milestone payments in case of full commercial success of multiple drug products.

The promised goods and services under the Boehringer Ingelheim Agreement are accounted for as a single combined performance obligation consisting of a research license, a development and commercialization license and research services. The Company’s research services performance obligation under the original term of the Boehringer Ingelheim Agreement was completely satisfied as of January 2018, and accordingly the estimated total transaction price of the Boehringer Ingelheim Agreement under the original contractual term was fully recognized as revenue over the period from January 2016 through January 2018. The Company recognizes revenue for the combined performance obligation based on the amount of incurred development expenses reimbursed by the customer as a percentage of total expected reimbursable expenses associated with the contract. As of December 31, 2021, all future potential milestone payments were excluded from the estimated total transaction price as they are considered constrained.

For the years ended December 31, 2019, the Company recognized revenue of $1.7 million from the Boehringer Ingelheim Agreement. The Company did not recognize revenue from the Boehringer Ingelheim Agreement during the years ended December 31, 2021 and 2020.

Beacon Discovery, Inc.

In September 2016, the Company entered into a series of agreements with Beacon, a privately held drug discovery incubator which focuses on identifying and advancing molecules targeting GPCRs. Beacon was founded in 2016 by several of the Company’s former employees.

The Company entered into an agreement, or License and Collaboration Agreement, with Beacon, pursuant to which the Company transferred certain equipment to Beacon and granted Beacon a non-exclusive, non-assignable and non-sublicensable license to certain database information relating to compounds, receptors and pharmacology, and transferred certain equipment to Beacon. Beacon will seek to engage global partners to facilitate discovery and development. Beacon has agreed to assign to the Company any intellectual property relating to its existing research and development programs developed in the course of performing research for the Company and grant the Company a non-exclusive license to any intellectual property developed outside the course of performing work for it that is reasonably necessary or useful for developing or commercializing the products under the Company’s research and development programs. The Company is also entitled to rights of negotiation and rights of first refusal to potentially obtain licenses to compounds discovered and developed by Beacon. In addition, the Company is entitled to receive (i) a percentage of any revenue received by Beacon on or after the second anniversary of the effective date of the agreement from any third party pursuant to a third-party license, including upfront payments, milestone payments and royalties; (ii) single-digit royalties on the aggregate net sales of any related products sold by Beacon and its affiliates; and (iii) in the event that Beacon is sold, a percentage of the consideration for such sale transaction.

The Company entered a services agreement with Beacon, or Master Services Agreement, pursuant to which Beacon performs certain research services for it.

The Company also entered into a separate services agreement with Beacon, or Beacon Services Agreement, pursuant to which Beacon performed its research obligations under the Company’s agreement with Boehringer Ingelheim. In consideration for performing these research obligations, Beacon is entitled to receive the applicable FTE payments that are paid to the Company by Boehringer Ingelheim for the research services and certain milestone payments.

The Company also entered into a sublease agreement, or Sublease, with Beacon, pursuant to which it subleased approximately 30,000 square feet of laboratory, office and meeting room space to Beacon until May 2027.

In 2020, the Company entered into a new multi-year strategic Collaboration and License Agreement with Beacon, aimed at building novel medicines across a range of GPCR targets believed to play a role in immune and inflammatory diseases. Under the terms of this agreement Beacon is responsible for early drug discovery activities and the Company will be responsible for any potential future development and, ultimately, commercialization activities. The Company is required to pay to Beacon research initiation fees, make quarterly research funding payments for the duration of Beacon’s research activities as well as research, development and regulatory milestone payments depending on the future research and development progress. The Company is also obligated to pay Beacon tiered royalties on net sales of low single digits levels.

In the first quarter of 2021, the Company received a $1.1 million payment as a result of the merger (“Merger”) between Eurofins Beacon Discovery Holdings, Inc. (“Eurofins”) and Beacon. This payment satisfied Beacon’s obligation to pay the Company a percentage of the consideration for such sale transaction in the event that Beacon was sold as outlined in the 2016 License and Collaboration Agreement. The Company is eligible to receive future contingent consideration payments based on certain performance metrics achieved by Beacon over a four-year performance period through the first quarter of 2025 up to an aggregate of $2.0 million.

Following the Merger, the Company entered into a Consent and Release Agreement that terminated the Company’s rights of negotiation and rights of first refusal to potentially obtain licenses to certain compounds discovered and developed by Beacon. In addition, the Consent and Release Agreement terminated the Company’s right, under the 2016 License and Collaboration Agreement, to receive any revenue received by Beacon including upfront payments, milestone payments and royalties. The 2020 Collaboration and License Agreement with Beacon remains in effect and was not impacted by the Merger.

Outpost Medicine LLC

In April 2018, the Company and Outpost Medicine entered into a license agreement, or Outpost Agreement, under which Outpost Medicine has an exclusive right to advance LP352 for the potential treatment of genitourinary disorders.

For the year ended December 31, 2019, the Company recognized revenues of $0.5 million from the Outpost Agreement. During the year ended December 31, 2020, the Outpost Agreement was terminated.

Axovant Sciences GmbH

In 2015, the Company entered into a development, marketing and supply agreement with Roivant Sciences Ltd., which subsequently assigned the exclusive rights to develop and commercialize nelotanserin to its subsidiary, Axovant. Under this agreement, Axovant had exclusive worldwide rights to develop and commercialize nelotanserin, subject to regulatory approval. The Company also provided certain services and manufactured and sold nelotanserin to Axovant. The Company refers to this agreement as the Axovant Agreement.

In the fourth quarter of 2019, the Axovant Agreement was terminated.