Revenues and Contract Obligations

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenues and Contract Obligations

Note 3. Revenues and Contract Obligations

In December 2022, the Company entered into a License and Distribution Agreement (the "Distribution Agreement") with a customer granting exclusive distribution rights of the Company's SCD device within the United States of America to the customer. Under the terms of the Distribution Agreement, the customer will pay the Company consideration comprising both a per unit sales price for each unit shipped and a royalty for all units sold by the customer.

In addition, the customer also agreed to pay (i) a $0.1 million upfront payment at contract inception (the "Upfront Payment"), and (ii) two contingent milestones payments of (a) $0.5 regulatory milestone tied to receiving HDE approval from the FDA (the "Regulatory Milestone"), and (b) $0.3 million sales-based milestone (the "Sales Based Milestone").

The Company has the following performance obligations within the Distribution Agreement: (i) a material right to the customer for an exclusive option to purchase additional pediatric SCD devices during the term of the contract for a discounted price, (ii) provide training to medical professionals and (iii) upon each issuance of a purchase order, delivery of pediatric SCD devices. The transaction price for the material right and training is comprised of the Upfront payment, the Regulatory Milestone and the Sales Based Milestone. The transaction price for each pediatric SCD device sold will be the actual price for each device and the estimated royalties to be received.

As of and for the six-months ended June 30, 2024, the Company had not shipped any pediatric SCD devices under the Distribution Agreement, and accordingly, had not recognized or reported any revenue.

As of June 30, 2024, the Company received full consideration for the Upfront Payment and the Regulatory Milestone. No revenue had been recognized from this consideration as of June 30, 2024, and has been accounted for and disclosed as contract liabilities to be recognized over the remaining term of the Distribution Agreement beginning upon the first successful commercial shipment (see Note 14).

The following table summarizes the changes in the Company's contract liability balance for the six months ended June 30, 2024 and 2023:

	Six Months Ended June 30,
($ in thousands)	2024		2023
Contract liabilities, beginning of period	$	—	$	—
Consideration received and deferred		550		—
Recognition of revenue included in beginning of period contract obligations		—		—
Contract liabilities, end of period	$	550	$	—

As of June 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was equal to the contract liability balance.

The Company expects the following recognition of revenue from contract liabilities as of June 30, 2024:

Fiscal Year Ending December 31,
2024 (remaining)	$	56
2025		112
2026		112
2027		112
2028		112
Thereafter		46
Total	$	550