Royalty Agreements

12 Months Ended

Dec. 31, 2018

Royalty Agreements

Royalty Agreements

16. Royalty Agreements

In the third quarter of 2014, the Company received a $30.0 million payment pursuant to a Royalty Interest Acquisition Agreement related to the purchase by HC Royalty of certain of the Company’s rights under the Company’s agreement with United Therapeutics related to the commercialization of Orenitram (treprostinil) Extended-Release Tablets. The Company will retain full ownership of the royalty rights if and when a certain cumulative payment threshold is reached per the terms of the agreement. The Company recorded a non-recourse liability related to this transaction, and amortizes this amount as non-cash royalty revenue. Revenue recognition is based on estimated net product sales by United Therapeutics of Orenitram that result in payments made from United Therapeutics to HC Royalty.

The Company also recognizes non-cash interest expense related to this liability and accrues at an effective interest rate. That rate is determined based on projections of HC Royalty’s rate of return. The Company recognized non-cash interest expense of $4.3 million, $1.4 million and $4.5 million for the years ended December 31, 2018, 2017 and 2016, respectively.