Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Product Sales, Net

The Company’s product sales, net consist of sales in the U.S. of VIVITROL, ARISTADA and ARISTADA INITIO and, following its commercial launch in October 2021, LYBALVI, primarily to wholesalers, specialty distributors and pharmacies. During the three and six months ended June 30, 2023 and 2022, the Company recorded product sales, net, as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2023		2022		2023		2022
VIVITROL	$	102,071	$	96,105	$	198,730	$	180,959
ARISTADA and ARISTADA INITIO		82,409		74,622		162,486		147,107
LYBALVI		46,997		20,060		84,988		33,989
Total product sales, net	$	231,477	$	190,787	$	446,204	$	362,055

Manufacturing and Royalty Revenues

During the three and six months ended June 30, 2023 and 2022, the Company recorded manufacturing and royalty revenues from its collaboration arrangements as follows:

	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
(In thousands)	Manufacturing Revenue		Royalty Revenue		Total		Manufacturing Revenue		Royalty Revenue		Total
Long-acting INVEGA products(1)	$	—	$	321,239	$	321,239	$	—	$	334,801	$	334,801
VUMERITY		10,369		21,926		32,295		23,018		38,151		61,169
RISPERDAL CONSTA		4,901		240		5,141		15,317		806		16,123
Other		16,628		10,610		27,238		32,003		14,679		46,682
	$	31,898	$	354,015	$	385,913	$	70,338	$	388,437	$	458,775

	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
(In thousands)	Manufacturing Revenue		Royalty Revenue		Total		Manufacturing Revenue		Royalty Revenue		Total
Long-acting INVEGA products(1)	$	—	$	26,648	$	26,648	$	—	$	63,702	$	63,702
VUMERITY		5,650		20,520		26,170		17,045		39,720		56,765
RISPERDAL CONSTA		8,571		1,820		10,391		24,149		3,668		27,817
Other		11,353		10,764		22,117		23,207		19,005		42,212
	$	25,574	$	59,752	$	85,326	$	64,401	$	126,095	$	190,496

(1)“Long-acting INVEGA products”: INVEGA SUSTENNA/XEPLION (paliperidone palmitate), INVEGA TRINZA/TREVICTA (paliperidone palmitate) and INVEGA HAFYERA/BYANNLI (paliperidone palmitate)

In November 2021, the Company received notice of partial termination of an exclusive license agreement with Janssen Pharmaceutica N.V., a subsidiary of Johnson & Johnson (“Janssen Pharmaceutica”). Under this license agreement, the Company provided Janssen Pharmaceutica with rights to, and know-how, training and technical assistance in respect of, the Company’s small particle pharmaceutical compound technology, known as NanoCrystal technology, which was used to develop the Long-acting INVEGA products. When the partial termination became effective in February 2022, Janssen Pharmaceutica ceased paying royalties related to sales of INVEGA SUSTENNA, INVEGA TRINZA and INVEGA HAFYERA in the U.S. Accordingly, the Company ceased recognizing royalty revenue related to U.S. sales of these products in February 2022. In April 2022, the Company commenced binding arbitration proceedings related to, among other things, Janssen Pharmaceutica’s partial termination of this license agreement and its royalty and other obligations under the agreement. On May 31, 2023, the arbitral tribunal (the “Tribunal”) in the arbitration proceedings issued a final award (the “Final Award”) which concluded the arbitration proceedings. The Final Award provided, among other things, that the Company was due back royalties of $195.4 million, inclusive of $8.1 million in late-payment interest related to 2022 U.S. net sales of the Long-acting INVEGA products, which amount the Company received from Janssen Pharmaceutica in the second quarter of 2023, and is entitled to 2023 and future royalty revenues from Janssen Pharmaceutica related to net sales of INVEGA SUSTENNA through August 20, 2024, INVEGA TRINZA through the second quarter of 2030 (but no later than May 2030 when the license agreement expires) and INVEGA HAFYERA through May 2030 (when the license agreement expires).

Following issuance of the Final Award, the Company recognized royalty revenues related to the back royalties noted above and resumed recognizing royalty revenue related to ongoing U.S. sales of the Long-acting INVEGA products. During the three months ended June 30, 2023, the Company recorded $195.4 million in royalty revenue related to the back royalties, $50.2 million in royalty revenue related to U.S. net sales of the Long-acting INVEGA products earned during the first quarter of 2023 and $75.7 million in royalty revenue related to worldwide net sales of the Long-acting INVEGA products earned during the second quarter of 2023. Refer to Note 15, Commitments and Contingent Liabilities within the “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q for additional information regarding the arbitration proceedings with Janssen Pharmaceutica.

Contract Assets

Contract assets include unbilled amounts resulting from sales under certain of the Company’s manufacturing contracts where revenue is recognized over time. The amounts included in the contract assets table below are classified as “Current assets” in the accompanying condensed consolidated balance sheets, as they relate to manufacturing processes that are completed in ten days to eight weeks.

Total contract assets at June 30, 2023 were as follows:

(In thousands)	Contract Assets
Contract assets at December 31, 2022	$	8,929
Additions		10,115
Transferred to receivables, net		(19,044	)
Contract assets at June 30, 2023	$	—

Contract Liabilities

Contract liabilities consist of contractual obligations related to deferred revenue. At June 30, 2023 and December 31, 2022, $3.3 million and $6.8 million of the contract liabilities, respectively, were classified as “Contract liabilities–short-term” in the accompanying condensed consolidated balance sheets and $2.4 million and $3.9 million of the contract liabilities, respectively, were classified as “Other long-term liabilities” in the accompanying condensed consolidated balance sheets.

Total contract liabilities at June 30, 2023 were as follows:

(In thousands)	Contract Liabilities
Contract liabilities at December 31, 2022	$	10,701
Additions		(932	)
Amounts recognized into revenue		(4,101	)
Contract liabilities at June 30, 2023	$	5,668