Discontinued Operations

6 Months Ended

Jun. 30, 2022

Discontinued Operations

Discontinued Operations

Note 3—Discontinued Operations

On December 23, 2021, we completed the sale of OMIDRIA and certain related assets including inventory and prepaid expenses. We retained the outstanding accounts receivable and all outstanding liabilities related to OMIDRIA as of the closing date.

Upon closing, we received an up-front cash payment of $126.0 million. We receive a 50% royalty on OMIDRIA net sales in the U.S. until the earlier of January 1, 2025 or the payment of the $200.0 million milestone described below. After such date, we will receive a 30% royalty on OMIDRIA net sales in the U.S. (the “U.S. base royalty rate”) until the expiration or termination of the last issued and unexpired U.S. patent. The U.S. base royalty rate is reduced to 10% upon the occurrence of certain events described in the Asset Purchase Agreement, including during any specific period in which OMIDRIA is no longer eligible for separate payment. We will also receive a royalty of 15% on OMIDRIA net sales outside the U.S. on a country-by-country basis until the expiration or termination of the last issued and unexpired OMIDRIA patent in such country. We will receive a $200.0 million milestone payment if, prior to January 1, 2025, separate payment for OMIDRIA is secured in the U.S. for a continuous period of at least four years.

During the three and six months ended June 30, 2022, we earned royalties of $17.2 million and $31.1 million on sales of OMIDRIA which we recorded as a reduction from the OMIDRIA contract royalty asset. We also recorded $17.1 million of income in discontinued operations representing interest income and remeasurement adjustments to the OMIDRIA contract royalty asset. The following schedule presents a rollforward of the OMIDRIA contract royalty asset (in thousands):

OMIDRIA contract royalty asset at December 31, 2021	$	184,570
Royalties earned		(31,062)
Royalty interest income and remeasurement adjustments		17,098
OMIDRIA contract royalty asset at June 30, 2022	$	170,606

Net income from discontinued operations is as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
	(In thousands)
Product sales, net	$	—	$	28,823	$	—	$	49,884
Royalty interest income and remeasurement adjustments		10,102		—		17,098		—
Total		10,102		28,823		17,098		49,884
Other (income), costs and expenses, net		(744)		7,229		(231)		13,611
Net income from discontinued operations	$	10,846	$	21,594	$	17,329	$	36,273

Cash flow from discontinued operations is as follows:

	Six Months Ended June 30,
	2022		2021
	(In thousands)
Total operating cash flows from discontinued operations	$	13,983	$	(22,821)