PRODUCT REVENUE

9 Months Ended

Sep. 30, 2022

REVENUE RECOGNITION

REVENUE RECOGNITION

NOTE 4—PRODUCT REVENUE

The Company’s product revenues were generated from sales of DANYELZA and totaled $12,537,000 and $32,820,000 for the three and nine months ended September 30, 2022, and $8,965,000 and $23,299,000 for the three and nine months ended September 30, 2021.

Revenue from product sales is recorded net of applicable provisions for rebates, chargebacks, discounts, distribution-related fees and other sales-related deductions. Accruals for chargebacks, discounts and distribution-related fees with contractual right of offset are recorded as a direct reduction to accounts receivable. Accruals for rebates, distribution-related fees without contractual right of offset and other sales-related deductions are recorded within accrued liabilities. As of September 30, 2022, the Company had recorded accounts receivable allowances of approximately $734,000 and accrued liabilities of $2,451,000 related to product sales during the nine months ended September 30, 2022. As of December 31, 2021, the Company had recorded accounts receivable allowances of approximately $486,000 and accrued liabilities of $2,615,000 related to product sales.

An analysis of the change in reserves for discounts and allowances is summarized as follows:

			Contractual
			Allowances and
	Discounts		Government Rebates		Returns		Total
	(in thousands)
Balance, December 31, 2021	$	13	$	3,027	$	61	$	3,101
Current provisions relating to sales in current year		65		3,459		379		3,903
Payments/credits relating to sales in current year		(59)		(2,653)		(398)		(3,110)
Change in estimate		—		(709)		—		(709)
Balance, September 30, 2022	$	19	$	3,124	$	42	$	3,185

Substantially all of the Company’s product sales were in the United States. The Company had product sales to certain customers that accounted for more than 10% of total gross product revenue for the three and nine months ended September 30, 2022 and September 30, 2021. McKesson and AmerisourceBergen accounted for 78% and 14%, respectively, of the Company’s gross product revenue for the three months ended September 30, 2022. McKesson and AmerisourceBergen accounted for 66% and 24%, respectively, of the Company’s gross product revenue for the three months ended September 30, 2021. McKesson and AmerisourceBergen accounted for 69% and 16%, respectively, of the Company’s gross product revenue for the nine months ended September 30, 2022. McKesson and AmerisourceBergen accounted for 73% and 17%, respectively, of the Company’s gross product revenue for the nine months ended September 30, 2021.

During the quarter and nine months ended September 30, 2022 the Company recorded a change in estimate resulting in a benefit of $709,000 as the Company assessed claims data and reserves for historical earned periods.