Concentrations of Credit Risk and Current Expected Credit Losses

6 Months Ended

Jun. 30, 2022

Concentrations of Credit Risk and Current Expected Credit Losses

Concentrations of Credit Risk and Current Expected Credit Losses

Note 5.     Concentration of credit risk and current expected credit losses

In November 2009, we entered into a collaboration and license agreement with Novartis Pharmaceutical International Ltd. (“Novartis”). In December 2009, we entered into a license, development and commercialization agreement with Eli Lilly and Company (“Lilly”). In December 2018, we entered into a research collaboration and licensing agreement with Innovent Biologics, Inc. (“Innovent”). In July 2019, we entered into a collaboration and license agreement with Zai Lab (Shanghai) Co., Ltd., a subsidiary of Zai Lab Limited (collectively, “Zai Lab”). The above collaboration partners comprised, in aggregate, 37% and 36% of the accounts receivable balance as of June 30, 2022 and December 31, 2021, respectively. For further information relating to these collaboration and license agreements, refer to Note 7.

In November 2011, we began commercialization and distribution of JAKAFI, in April 2020, we began commercialization and distribution of PEMAZYRE, and in October 2021, we began commercialization and distribution of OPZELURA to a number of customers. Our product revenues are concentrated in a number of these customers. The concentration of credit risk related to our JAKAFI, PEMAZYRE and OPZELURA product revenues is as follows:

	Percentage of Total Net				Percentage of Total Net
	Product Revenues for the				Product Revenues for the
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Customer A	19	%	19	%	19	%	18	%
Customer B	12	%	13	%	12	%	13	%
Customer C	16	%	18	%	18	%	18	%
Customer D	6	%	10	%	5	%	10	%
Customer E	10	%	12	%	10	%	12	%

We are exposed to risks associated with extending credit to customers related to the sale of products. Customers A, B, C, D and E comprised, in aggregate, 31% of the accounts receivable balance as of both June 30, 2022 and December 31, 2021. The concentration of credit risk relating to our other product revenues or accounts receivable is not significant.

We assessed our collaborative and customer receivable assets as of June 30, 2022 according to our accounting policy for applying reserves for expected credit losses, noting minimal history of uncollectible receivables and the continued perceived creditworthiness of our third party sales relationships, upon which the expected credit losses were considered de minimis. As of June 30, 2022 and December 31, 2021, we had no allowance for doubtful accounts.