On October 1, 2017, the Company completed a royalty purchase agreement with HealthCare Royalty Partners, or HCRP (the “Royalty Agreement”). In exchange for the payment of $40 million to the Company, HCRP obtained the right to receive Fampyra royalties payable by Biogen under the Biogen Collaboration Agreement up to an agreed upon threshold of royalties. This threshold was met during the second quarter of 2022 and our obligations to HCRP expired upon Biogen’s payment of royalties for that quarter.

Since the Company maintained rights under the Biogen Collaboration Agreement, therefore, the Royalty Agreement has been accounted for as a liability that will be amortized using the effective interest method over the life of the arrangement, in accordance with the relevant accounting guidance. The Company recorded the receipt of the $40 million payment from HCRP and established a corresponding liability in the amount of $40 million, net of transaction costs of approximately $2.2 million. The net liability is classified between the current and non-current portion of liability related to the sale of future royalties in the consolidated balance sheets based on the recognition of the interest and principal payments to be received by HCRP in the 12 months following the financial statement reporting date. The total net royalties to be paid, less the net proceeds received, is recorded to interest expense using the effective interest method over the life of the Royalty Agreement. The Company estimates the payments to be made to HCRP over the term of the Royalty Agreement based on forecasted royalties and calculates the interest rate required to discount such payments back to the liability balance. Over the course of the Royalty Agreement, the actual interest rate will be affected by the amount and timing of net royalty revenue recognized and changes in forecasted revenue. On a quarterly basis, the Company reassess the effective interest rate and adjust the rate prospectively as necessary.

The Company has a liability related to the sale of future royalties of $0 and $7.5 million for the periods ending September 30, 2022 and 2021, respectively.

The following table shows the activity within the liability account for the nine-month period ended September 30, 2022 and 2021, respectively:

(In thousands)	September 30, 2022			September 30, 2021
Liability related to sale of future royalties - beginning balance	$	4,460		$	15,257
Deferred transaction costs amortized		33			193
Non-cash royalty revenue payable to HCRP		(4,739	)		(8,889	)
Non-cash interest expense recognized		246			891
Liability related to sale of future royalties - ending balance	$	—		$	7,452