For the years ended December 31, 2020, 2019 and 2018, $1.4 million, $0.3 million, and $0.3 million, respectively, of product supply revenue was recorded for manufacturing supply of tenapanor and other materials to KKC for its product development and clinical trials in Japan, in accordance with the Company’s agreement with KKC, and for each period, negligible cost of revenue was recorded pursuant to the AstraZeneca Termination Agreement.
Shanghai Fosun Pharmaceutical Industrial Development Co. Ltd. , or Fosun Pharma
In December 2017, the Company entered into an exclusive license agreement with Fosun Pharma, or the Fosun Agreement, for the development, commercialization and distribution of tenapanor in China for both hyperphosphatemia and irritable bowel syndrome with constipation, or IBS-C. The Company assessed these arrangements in accordance with ASC 606 and concluded that the contract counterparty, Fosun Pharma, is a customer. Under the terms of the Fosun Agreement, the Company received $12.0 million in up-front license fees which was recognized as revenue when the agreement was executed. Based on the Company’s assessment, it identified that the license and the manufacturing supply services were its material performance obligations at the inception of the agreement, and as such each of the performance obligations are distinct.
In addition, the Company may be entitled to additional development and commercialization milestones of up to $110.0 million, as well as reimbursement of cost plus a reasonable overhead for the supply of product and tiered royalties on net sales ranging from the mid-teens to 20%. The variable consideration related to the remaining development milestone payments has not been included in the transaction price as these were fully constrained at December 31, 2019.
For the year ended December 31, 2019, $3.0 million revenue was recorded towards achievement of a milestone related to the Fosun Agreement, and for the years ended December 31, 2020 and 2018, no revenue was recorded.
Knight Therapeutics, Inc. , or Knight
In March 2018, the Company entered into an exclusive license agreement with Knight Therapeutics, Inc., or the Knight Agreement, for the development, commercialization and distribution of tenapanor in Canada for hyperphosphatemia and IBS-C. The Company assessed these arrangements in accordance with ASC 606 and concluded that the contract counterparty, Knight, is a customer. Based on the Company’s assessment, it identified that the license and the manufacturing supply services were its material performance obligations at the inception of the agreement, and as such each of the performance obligations are distinct.
Under the terms of the agreement, the Company is eligible to receive up to CAD 25.0 million in total payments, or $19.6 million at the currency exchange rate on December 31, 2020, including an up-front payment and development and sales milestones, reimbursement of supply costs on a schedule specifying cost per tablet, with a reasonable mark up for overhead, as well as tiered royalty rates on net sales ranging from the mid-single digits to the low twenties. The variable consideration related to the remaining development milestone payments has not been included in the transaction price as these were fully constrained at December 31, 2020.
For the years ended December 31, 2020, 2019 and 2018, $0.7 million, zero and $2.3 million of revenue was recorded, respectively, related to the Knight Agreement. For the year ended December 31, 2020, $0.1 million product supply revenue was recorded related to the Knight Agreement. There was no product revenue related to the Knight Agreement in 2019 or 2018. Pursuant to the AstraZeneca Termination Agreement, $0.1 million, zero and $0.5 million of cost of revenue was recorded during 2020, 2019 and 2018, respectively.
AstraZeneca
In June 2015, the Company entered into a termination agreement with AstraZeneca, or the AstraZeneca Termination Agreement, pursuant to which the Company remains liable to pay AstraZeneca license fees for (i) future royalties at a royalty rate of 10% of net sales of tenapanor or other NHE3 products by the Company or its licensees, and (ii) 20% of non-royalty revenue received from a new collaboration partner should the Company elect to license, or otherwise provide rights to develop and commercialize tenapanor or certain other NHE3 inhibitors, up to a maximum of $75.0 million in