Development and Commercialization Agreement

12 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Development and Commercialization Agreement

Development and Commercialization Agreement

On March 30, 2020, the Company entered an exclusive license agreement for Richter to commercialize relugolix combination tablet for uterine fibroids and endometriosis in Europe, the Commonwealth of Independent States including Russia, Latin America, Australia, and New Zealand. Under the agreement, the Company received an upfront payment of $40.0 million on March 31, 2020, which is included in current deferred revenue on the consolidated balance sheet, and is eligible to receive up to $40.0 million in regulatory milestone payments (of which $10.0 million was received in April 2020) and $107.5 million in sales-related milestones, and tiered royalties on net sales following regulatory approval. Under the terms of the agreement, the Company will continue to lead global development of relugolix combination tablet. The Company has also agreed to assist Richter in transferring manufacturing technology from the Company’s contract manufacturing organizations to Richter to enable Richter to manufacture relugolix combination tablet. If requested by Richter, the Company has agreed to supply Richter with quantities of relugolix combination tablet for its territories pursuant to the Company’s agreements with its contract manufacturing organizations. Richter will be responsible for local clinical development, manufacturing, and all commercialization activities for its territories. The Company has also granted Richter an option to collaborate with the Company on relugolix combination tablet for future indications in women’s health other than fertility.

The Company concluded that Richter represented a customer and applied relevant guidance from ASC 606 to evaluate the appropriate accounting under the Development and Commercialization Agreement. In accordance with this guidance, the Company identified one material combined performance obligation to grant a license to Richter to certain of its intellectual property and the delivery of certain clinical and regulatory data packages for uterine fibroids and endometriosis. The Company determined that its grant of a license to Richter to certain of its intellectual property was not distinct from the delivery of certain clinical and regulatory data packages. The Company concluded that the combined performance obligation had not been satisfied as of March 31, 2020, and as a result has included the $40.0 million upfront payment as current deferred revenue on the consolidated balance sheet.

The Company determined that the initial transaction price under the Richter Development and Commercialization Agreement totaled $50.0 million, consisting of the upfront payment of $40.0 million received on March 31, 2020 and the $10.0 million regulatory milestone payment received in April 2020. The Company will recognize the transaction price as revenue when the combined performance obligation is satisfied. The Company has not assigned a transaction price to any other regulatory milestones, sales-related milestones, or royalties on net sales following regulatory approval given the substantial uncertainty related to their achievement.