11.        Revenue recognition

Net product sales

The Company views its operations and manages its business in one operating segment.

During the three months ended September 30, 2022 and 2021, net product sales in the United States were $54.8 million and $47.1 million, respectively, consisting solely of Emflaza, and net product sales outside of the United States were $79.4 million and $68.5 million, respectively, consisting of Translarna, Tegsedi and Waylivra. Translarna net revenues made up $76.6 million and $67.2 million of the net product sales outside of the United States for the three months ended September 30, 2022 and 2021, respectively. For the three months ended September 30, 2022 and 2021, the Company had a total of two and two distributors, respectively, that each accounted for over 10% of the Company’s net product sales.

During the nine months ended September 30, 2022 and 2021, net product sales in the United States were $160.1 million and $139.8 million, respectively, consisting solely of Emflaza, and net product sales outside of the United States were $247.6 million and $170.2 million, respectively, consisting of Translarna, Tegsedi, Waylivra, and Upstaza. Upstaza sales commenced during the nine months ended September 30, 2022. Translarna net revenues made up $232.9 million and $166.3 million of the net product sales outside of the United States for the nine months ended September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021, the Company had a total of two and two distributors, respectively, that each accounted for over 10% of the Company’s net product sales.

As of September 30, 2022 and December 31, 2021, the Company did not have any contract liabilities or assets. For the three and nine months ended September 30, 2022, the Company did not recognize any revenue related to the amounts included in the contract liability balance at the beginning of the period. During the three month period ended September 30, 2021, the Company did not recognize any revenue related to the amounts included in the contract liability balance at the beginning of the period. For the nine month period ended September 30, 2021, the Company recognized $4.0 million of revenue related to the amounts included in the contract liability balance at the beginning of the period. The Company has not made significant changes to the judgments made in applying ASC Topic 606 for the three and nine months ended September 30, 2022 and 2021.

Remaining performance obligations

Remaining performance obligations represent the transaction price for goods the Company has yet to provide. As of September 30, 2022 and December 31, 2021 the Company does not have any remaining performance obligations relating to net product revenue.

Collaboration and Royalty revenue

In November 2011, the Company and the SMA Foundation entered into the SMA License Agreement with Roche. Under the terms of the SMA License Agreement, Roche acquired an exclusive worldwide license to the Company’s SMA program.

Under the SMA License Agreement, the Company is eligible to receive additional payments from Roche if specified events are achieved with respect to each licensed product, including up to $135.0 million in research and development event milestones, up to $325.0 million in sales milestones upon achievement of specified sales events, and up to double digit royalties on worldwide annual net sales of a commercial product.

The SMA program currently has one approved product, Evrysdi, which was approved in August 2020 by the FDA for the treatment of SMA in adults and children two months and older.  As of September 30, 2022, the Company does not have any remaining research and development event milestones that can be received. The remaining potential sales milestones that can be received is $250.0 million.

For the three months ended September 30, 2022 and 2021, the Company recognized collaboration revenue related to the SMA License Agreement of $50.0 million and $10.0 million, respectively. For the nine months ended September 30, 2022 and 2021, the Company recognized collaboration revenue related to the SMA License Agreement of $50.0 million and $30.0 million, respectively. In September 2022, the Company recognized a sales milestone of $50.0 million for the achievement of $750.0 million in worldwide annual net sales from Evrysdi, which is recorded on the balance sheet within prepaid expenses and other current assets as of September 30, 2022. The final research and development milestone under the SMA License Agreement of $10.0 million for the first commercial sale of Evrysdi in Japan was received during the three months ended September 30, 2021. The first commercial sale of Evrysdi in the EU was made in March 2021, which triggered a $20.0 million milestone payment to the Company from Roche for the nine months ended September 30, 2021.

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In addition to research and development and sales milestones, the Company is eligible to receive up to double-digit royalties on worldwide annual net sales of a commercial product under the SMA License Agreement. For the three and nine months ended September 30, 2022, the Company has recognized $32.9 million and $73.6 million of royalty revenue, respectively, related to Evrysdi. For the three and nine months ended September 30, 2021, the Company has recognized $13.1 million and $33.3 million of royalty revenue, respectively, related to Evrysdi.