Revenues

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenues

Note 5. Revenues

The following table summarizes our revenues by collaboration, category of revenue, and the method of recognition (in millions):

			Three Months Ended March 31,
	Over time	Point in time	2023		2022
Gilead Collaboration
License and R&D services	*			17		8
Access rights	*			8		8
Taiho Collaboration
Access rights	*			-		2
Total revenues			$	25	$	18

Revenues from Gilead accounted for 100% and 89% of Total revenues for the three months ended March 31, 2023 and 2022, respectively.

The following table summarizes the revenue recognized as a result of changes in the deferred revenue balance (in millions):

	Three Months Ended March 31,
	2023		2022
Revenue recognized from amounts included in deferred revenue at the beginning of the period	$	25	$	18

Revenue from the Gilead Collaboration

We had $427 million and $452 million of deferred revenue remaining on our Condensed Consolidated Balance Sheets related to the Gilead collaboration at March 31, 2023 and December 31, 2022, respectively, allocated between current and noncurrent based on the expected timing of future recognition.

Activity for performance obligations under this arrangement for the periods presented herein was as follows:

Etrumadenant - License and R&D Services

Under the Amended Gilead Collaboration Agreement, Gilead has an exclusive license and we are also obligated to perform further R&D services for Gilead related to etrumadenant. We determined that the license and R&D services were combined based on an evaluation of the delivery of the license, due to the early stage of the technology and the specialized nature of our know-how. We allocated arrangement consideration of $219 million to the combined license and R&D services performance obligation and recognize the amounts allocated as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the program.

We recognized $8 million and $5 million in license and R&D services revenue for the three months ended March 31, 2023 and 2022, respectively. At March 31, 2023, we had $177 million of deferred revenue remaining on our Condensed Consolidated Balance Sheet related to this performance obligation.

Quemliclustat - License and R&D Services

Under the Amended Gilead Collaboration Agreement, Gilead has an exclusive license and we are also obligated to perform further R&D services for Gilead related to quemliclustat. We determined that the license and R&D services were combined based on an evaluation of the delivery of the license, due to the early stage of the technology and the specialized nature of our know-how. We allocated arrangement consideration of $176 million to the combined license and R&D services performance obligation and recognize the amounts allocated as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the program.

We recognized $8 million and $2 million in license and R&D services revenue for the three months ended March 31, 2023 and 2022, respectively. At March 31, 2023, we had $142 million of deferred revenue remaining on our Condensed Consolidated Balance Sheet related to this performance obligation.

Domvanalimab - R&D Services

Under the Amended Gilead Collaboration Agreement, we have an obligation to perform further R&D services for Gilead related to domvanalimab. We determined that these services are distinct based on an evaluation of the delivery of the related license, noting that the program was in the later stages of development and license met the criteria for being distinct from the R&D services required. We allocated arrangement consideration of $34 million to the R&D services performance obligation and recognize the amounts allocated as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the program.

We recognized $1 million in license and R&D services revenue for each of the three months ended March 31, 2023 and 2022. At March 31, 2023, we had $29 million of deferred revenue remaining on our Condensed Consolidated Balance Sheet related to this performance obligation.

Zimberelimab - R&D and Commercialization Services

Under the Amended Gilead Collaboration Agreement, we have an obligation to perform further R&D and commercialization services for Gilead related to zimberelimab, as a monotherapy and in combination with other agents. We determined that these services are distinct based on an evaluation of the delivery of the related license, noting that the program was in the later stages of development and license met the criteria for being distinct from the R&D and commercialization services required. We allocated arrangement consideration of $11 million to the R&D and commercialization services performance obligation and recognize the amounts allocated as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the program.

For the three months ended March 31, 2023 and 2022, revenue recognized was not significant. As of December 31, 2022, substantially all the revenue related to this performance obligation had been recognized.

Access Rights and Option Continuation Periods

Under the Amended Gilead Collaboration Agreement, Gilead has exclusive access to our current programs as well as the future programs for a period of ten years, contingent upon option continuation payments totaling $300 million, consisting of a $100 million payment on each of the fourth, sixth, and eighth anniversaries of the agreement. We allocated arrangement consideration of $121 million to this performance obligation.

We use a time-elapsed input method to measure progress toward satisfying this obligation, which is the method we believe most faithfully depicts our performance in transferring the promised services during the time period in which Gilead has access to our R&D pipeline. Accordingly, the revenue allocated to this performance obligation is being recognized using this input method over the minimum four-year period. We have determined that Gilead is not obligated to pay the remaining $300 million due over the remainder of the term and excluded these payments from the transaction price. Failure to pay the non-obligatory option continuation payments will result in Gilead’s loss of certain rights to access and obtain licenses to the programs arising from our R&D pipeline.

We recognized as revenue $8 million associated with the performance of this obligation for each of the three months ended March 31, 2023 and 2022. At March 31, 2023, we had $79 million of deferred revenue on our Condensed Consolidated Balance Sheet related to this performance obligation.

Capitalized Costs to Obtain Contracts

We incurred certain costs to obtain the Gilead Collaboration Agreement in 2020 and the Amended Gilead Collaboration Agreement in 2021, which consisted of consultant and legal fees. We allocated these costs to the various performance obligations, to be recognized as the underlying performance obligations are satisfied and revenue is recognized.

For the three months ended March 31, 2023, and 2022, the recognized expense was not significant. At March 31, 2023, we had $4 million in capitalized costs to obtain the contracts, of which $1 million was recorded as Prepaid and other current assets and $3 million was recorded as Other noncurrent assets in our Condensed Consolidated Balance Sheet.