2.	Revenue from contracts with customers:

Effective January 1, 2018, the Company adopted Topic 606. The Company elected to apply the standard using the modified retrospective method beginning January 1, 2018. The Company applied this guidance only to those contracts that were not completed at the date of adoption. As a result of adoption, the cumulative impact to the Company’s retained earnings at January 1, 2018 was $0.135 million. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

There were no significant changes in the timing or amount of revenue recognized for the Company’s product sales and related gross-to-net adjustments under Topic 606. The Company’s net product sales continue to be recognized when delivery has occurred, and its gross-to-net adjustments are estimated and recorded in the accounting period related to when sales occur in the manner fundamentally consistent with the Company’s prior accounting methodology.

Under the new standard, timing for recognition of certain contract revenue may be accelerated such that a portion of revenue will be estimated and recognized in revenue earlier than the previous accounting standards. During the year ended December 31, 2018, the Company recorded financing revenue for a milestone that is not due until 2020.

The main types of revenue contracts are:

•

Product sales-Product sales amounts relate to sales of BELBUCA and BUNAVAIL. These sales are recognized as revenue when control is transferred to the wholesaler in an amount that reflects the consideration expected to be received.

•

Product royalty revenues-Product royalty revenue amounts are based on sales revenue of BELBUCA under the Company’s license agreement with Purdue Pharma (“Purdue”), the PAINKYL^™ product under the Company’s license agreement with TTY and the BREAKYL^™ product under the Company’s license agreement with Meda AB, which was acquired by Mylan N.V. (which we refer to herein as Mylan). Product royalty revenues are recognized when control of the product is transferred to the license partner in an amount that reflects the consideration expected to be received. Supplemental sales-based product royalty revenue may also be earned upon the subsequent sale of the product at agreed upon contractual rates.

•

Contract revenue-Contract revenue amounts are related to milestone payments under the Company’s license agreements with its partners including any associated financing component.

The impact of adoption of Topic 606 on the Company’s consolidated balance sheet as of December 31, 2018 follows (in thousands):


	Consolidated Balance Sheet
	December 31, 2018
	As reported			Balances without adoption of Topic 606			Effect of Adoption
Accounts receivable, net	$	13,627		$	13,462		$	165
Accumulated deficit	$	(351,288	)	$	(351,453	)	$	165

The impact of adoption of Topic 606 on the Company’s consolidated statement of operations for the year ended December 31, 2018 follows (in thousands):


	Consolidated Statement of Operations Year ended December 31, 2018
	As reported			Balances without adoption of Topic 606			Effect of Adoption
Product sales	$	51,410		$	51,410		$	—
Product royalty revenues		3,389			3,389			—
Contract revenues		841			811			30

Total revenues	$	55,640		$	55,610		$	30

Net loss	$	(33,867	)	$	(33,897	)	$	30

The beginning and ending balances of the Company’s accounts receivables with customers from contracts during the periods presented is as follows (in thousands):


	Balance at January 1, 2018		Year ended December 31, 2018		Balance at December 31, 2018
Accounts receivable with customers	$	8,987	$	4,640	$	13,627

On January 8, 2019, Purdue terminated their license agreement with the Company which was effective March 11, 2019 (See Note 10, Other license agreements and acquired product rights). Therefore, all previously presented contract revenue for future milestones related to the Purdue agreement as a result of the adoption of Topic 606 during the year ended December 31, 2018 has been reversed. The total amount reversed is $0.2 million and is recorded in the accompanying consolidated statement of operations for the year ended December 31, 2018.