Note 3—Revenue
(A) Product Revenue, Net
The Company’s product revenue, net relates entirely to the sale of VTAMA in the U.S. The Company began generating product revenue, net from sales of VTAMA in the U.S. following the approval of VTAMA for the treatment of plaque psoriasis in
adult patients by the FDA in May 2022. The Company records product revenue net of estimated chargebacks, discounts, rebates, returns, and other allowances associated with the respective sales.
(B) License, Milestone and Other Revenue
Covant
In March 2023, Covant Therapeutics Operating, Inc. (“Covant”), a wholly-owned
subsidiary of the Company, entered into a collaboration and license agreement with Boehringer Ingelheim International, GmbH (“BI”). Under the terms of the collaboration and license agreement, Covant will conduct discovery work on
RNA-specific adenosine deaminase 1 (“ADAR1”) targeting and modulating compounds and BI will receive an exclusive, royalty-bearing, worldwide transferable, sublicensable license to exploit Covant’s ADAR1 binding compounds and/or
resulting products worldwide. In exchange, Covant received a nonrefundable, upfront payment of $10.0 million and will be eligible to receive up to an additional $471.0
million in contingent milestone payments including specified research, development, regulatory, and commercialization milestones; and tiered royalties on global sales.
Dermavant
In January 2020, Dermavant entered into a collaboration and license agreement with Japan Tobacco Inc. (“JT”) for exclusive rights to develop, register, and market tapinarof in
Japan for the treatment of dermatological diseases and conditions, including psoriasis and atopic dermatitis. In conjunction with this agreement, JT executed an exclusive license agreement with its subsidiary, Torii Pharmaceutical Co.,
Ltd., for co-development and commercialization of tapinarof in Japan. The Company evaluated the collaboration and license agreement and concluded that JT is a customer. During the year ended March 31, 2024, a development milestone was
achieved, and the Company received a payment of $15.0 million. Accordingly, the Company recorded $15.0 million as license, milestone and other revenue in the accompanying consolidated statements of operations for the year ended March 31,
2024.
Genevant
Genevant Sciences Ltd. (“Genevant”), a technology-focused nucleic acid delivery and development company, is party to various collaboration and license
agreements. Related to these agreements, the Company recorded $24.9 million and $15.1 million as license, milestone, and other revenue in the accompanying consolidated statements of operations for the years ended March 31, 2024 and 2023,
respectively.