Financing Liabilities	6 Months Ended
Jun. 30, 2022
Fair Value Disclosures [Abstract]
Financing Liabilities	5. Financing Liabilities Funding Agreements In April 2021, we entered into a funding agreement with NovaQuest Co-Investment Fund XVI, L.P. (NovaQuest and the NovaQuest Funding Agreement) and a funding agreement with BC Pinnacle Holdings, LP (Bain, the Bain Funding Agreement and, together with the NovaQuest Funding Agreement, the Funding Agreements), pursuant to which NovaQuest and Bain will provide funding to support our development of tavapadon for the treatment of Parkinson’s disease. Under the terms of the Funding Agreements, we will receive up to $62.5 million in funding from each of NovaQuest and Bain, for a combined total of up to $125.0 million in funding (the Total Funding Commitment), of which approximately $31.1 million (25% of the Total Funding Commitment, net of $0.2 million of fees incurred by Bain and NovaQuest) was received in April 2021, $37.5 million (30% of the Total Funding Commitment) was received in April 2022, and approximately $31.3 million (25% of the Total Funding Commitment) and $25.0 million (20% of the Total Funding Commitment) are expected to be received on the second and third anniversaries of the effective date of the Funding Agreements, respectively, subject to certain customary funding conditions. In return, we agreed to pay to NovaQuest and Bain significant regulatory milestone, sales milestone and royalty payments upon approval of tavapadon by the FDA that collectively will not exceed $531.3 million. In addition, we have the option to satisfy our payment obligations to NovaQuest and Bain upon the earlier of FDA approval or May 1, 2025, by paying an amount equal to the Total Funding Commitment multiplied by an initial factor of 3.00x. This factor will increase ratably over time up to a maximum of 4.25x, less amounts previously paid to NovaQuest and Bain. We determined that each funding agreement represents a financial instrument that is considered to be a debt host containing embedded redemption features due to certain contingencies related to repayment. We elected to account for the Funding Agreements in accordance with the fair value option as permitted under ASC 825, Financial Instruments. As of June 30, 2022 and December 31, 2021, the estimated fair value of the financing liability related to potential amounts payable to Bain under the Bain Funding Agreement, which is reflected within our condensed consolidated balance sheets as financing liability, related party, totaled $27.2 million and $16.8 million, respectively. As of June 30, 2022 and December 31, 2021, the estimated fair value of the financing liability related to potential amounts payable to NovaQuest under the NovaQuest Funding Agreement, which is reflected within our condensed consolidated balance sheets as financing liability, totaled $27.2 million and $16.8 million, respectively. During the three months ended June 30, 2022, we recognized gains of approximately $0.9 million and $0.9 million, respectively, as a component of other income (expense), net within our unaudited condensed consolidated statements of operations and comprehensive loss, reflecting the change in fair value of the financing liabilities associated with the Bain and NovaQuest Funding Agreements. Gains of $2.9 million and $2.9 million, respectively, were recognized as a component of other income (expense), net within our unaudited condensed consolidated statements of operations and comprehensive loss for the six months ended June 30, 2022. For the three months ended June 30, 2022, we recognized unrealized gains of approximately $4.8 million and $4.8 million, respectively, within other comprehensive income (loss) related to the change in fair value attributable to instrument-specific credit risk for the financing liabilities associated with the Bain and NovaQuest Funding Agreements. Unrealized gains of approximately $5.4 million and $5.4 million, respectively, were recognized within other comprehensive income (loss) related to the change in fair value attributable to instrument-specific credit risk for the six months ended June 30, 2022. Changes in fair value attributable to instrument-specific credit risk were derived by benchmarking against the prior period credit spread to isolate the impact directly associated with the change in the credit spread utilized between periods. For the period of initial recognition on April 12, 2021 through June 30, 2021, losses of $0.5 million and $0.5 million, respectively, were recognized as a charge to other income (expense), net within our unaudited condensed consolidated statements of operations and comprehensive loss, reflecting the net change in fair value of the financing liabilities associated with the Bain and NovaQuest Funding Agreements. For the three and six months ended June 30, 2021, no amounts were recognized within other comprehensive income (loss) due to a change fair value attributable to instrument-specific credit risk as such amounts were not material. For additional information related to our Funding Agreements, please read Note 8, Financing Liabilities, to our audited consolidated financial statements included in our Annual Report.

Financing Liabilities

6 Months Ended

Jun. 30, 2022

5. Financing Liabilities

Funding Agreements

In April 2021, we entered into a funding agreement with NovaQuest Co-Investment Fund XVI, L.P. (NovaQuest and the NovaQuest Funding Agreement) and a funding agreement with BC Pinnacle Holdings, LP (Bain, the Bain Funding Agreement and, together with the NovaQuest Funding Agreement, the Funding Agreements), pursuant to which NovaQuest and Bain will provide funding to support our development of tavapadon for the treatment of Parkinson’s disease.

Under the terms of the Funding Agreements, we will receive up to $62.5 million in funding from each of NovaQuest and Bain, for a combined total of up to $125.0 million in funding (the Total Funding Commitment), of which approximately $31.1 million (25% of the Total Funding Commitment, net of $0.2 million of fees incurred by Bain and NovaQuest) was received in April 2021, $37.5 million (30% of the Total Funding Commitment) was received in April 2022, and approximately $31.3 million (25% of the Total Funding Commitment) and $25.0 million (20% of the Total Funding Commitment) are expected to be received on the second and third anniversaries of the effective date of the Funding Agreements, respectively, subject to certain customary funding conditions.

In return, we agreed to pay to NovaQuest and Bain significant regulatory milestone, sales milestone and royalty payments upon approval of tavapadon by the FDA that collectively will not exceed $531.3 million. In addition, we have the option to satisfy our payment obligations to NovaQuest and Bain upon the earlier of FDA approval or May 1, 2025, by paying an amount equal to the Total Funding Commitment multiplied by an initial factor of 3.00x. This factor will increase ratably over time up to a maximum of 4.25x, less amounts previously paid to NovaQuest and Bain.

We determined that each funding agreement represents a financial instrument that is considered to be a debt host containing embedded redemption features due to certain contingencies related to repayment. We elected to account for the Funding Agreements in accordance with the fair value option as permitted under ASC 825, Financial Instruments.

As of June 30, 2022 and December 31, 2021, the estimated fair value of the financing liability related to potential amounts payable to Bain under the Bain Funding Agreement, which is reflected within our condensed consolidated balance sheets as financing liability, related party, totaled $27.2 million and $16.8 million, respectively. As of June 30, 2022 and December 31, 2021, the estimated fair value of the financing liability related to potential amounts payable to NovaQuest under the NovaQuest Funding Agreement, which is reflected within our condensed consolidated balance sheets as financing liability, totaled $27.2 million and $16.8 million, respectively.

During the three months ended June 30, 2022, we recognized gains of approximately $0.9 million and $0.9 million, respectively, as a component of other income (expense), net within our unaudited condensed consolidated statements of operations and comprehensive loss, reflecting the change in fair value of the financing liabilities associated with the Bain and NovaQuest Funding Agreements. Gains of $2.9 million and $2.9 million, respectively, were recognized as a component of other income (expense), net within our unaudited condensed consolidated statements of operations and comprehensive loss for the six months ended June 30, 2022. For the three months ended June 30, 2022, we recognized unrealized gains of approximately $4.8 million and $4.8 million,

respectively, within other comprehensive income (loss) related to the change in fair value attributable to instrument-specific credit risk for the financing liabilities associated with the Bain and NovaQuest Funding Agreements. Unrealized gains of approximately $5.4 million and $5.4 million, respectively, were recognized within other comprehensive income (loss) related to the change in fair value attributable to instrument-specific credit risk for the six months ended June 30, 2022. Changes in fair value attributable to instrument-specific credit risk were derived by benchmarking against the prior period credit spread to isolate the impact directly associated with the change in the credit spread utilized between periods.

For the period of initial recognition on April 12, 2021 through June 30, 2021, losses of $0.5 million and $0.5 million, respectively, were recognized as a charge to other income (expense), net within our unaudited condensed consolidated statements of operations and comprehensive loss, reflecting the net change in fair value of the financing liabilities associated with the Bain and NovaQuest Funding Agreements. For the three and six months ended June 30, 2021, no amounts were recognized within other comprehensive income (loss) due to a change fair value attributable to instrument-specific credit risk as such amounts were not material.

For additional information related to our Funding Agreements, please read Note 8, Financing Liabilities, to our audited consolidated financial statements included in our Annual Report.

- Definition

The entire disclosure for a company's election to apply the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) the reasons for electing a fair value option for each eligible item or group of similar eligible items; (b) if the fair value option is elected for some but not all eligible items within a group of similar eligible items: (i) a description of those similar items and the reasons for partial election and (ii) information of how the group of similar items relates to individual balance sheet line items; (c) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected: (i) information of how each line item in the statement of financial position relates to major categories of assets and liabilities presented in accordance with other fair value disclosures and (ii) the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (d) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (e) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (f) for investments that would have been accounted for under the equity method if the entity had not chosen to apply the fair value option, the information required for such investments, if material either individually or in the aggregate; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) a description of how interest and dividends are measured and where they are reported in the income statement; (c) for loans and other receivables held as assets: (i) the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk and (ii) how the gains or losses attributable to changes in instrument-specific credit risk were determined; (d) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk: (i) the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk, (ii) qualitative information about the reasons for those changes, and (iii) how the gains and losses attributable to changes in instrument-specific credit risk were determined; and (3) certain other disclosures as required or determined to be provided.

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