5. DEVELOPMENT AGREEMENT	12 Months Ended
Dec. 31, 2018
Development Agreement
DEVELOPMENT AGREEMENT	5. DEVELOPMENT AGREEMENT On May 16, 2014, the Company entered into a funding and revenue sharing agreement (the “Development Agreement”) with an unrelated third party. The third party will fund operational expenses of the Company as well as the development costs related to the clinical development program aimed at receiving regulatory approval for the use of Elafin for the intravenous treatment of patients undergoing esophageal cancer surgery in the European Union. Total payments by the third party to the Company shall not exceed €3.5 million (approximately $4 million). Through December 31, 2018, the Company received approximately €1.6 million of the €3.5 million maximum. Revenue participation right payments will be made to the party when and if Elafin is commercialized within the European Union for the intravenous treatment of patients undergoing esophageal cancer surgery. The Development Agreement will terminate after the earlier of 15 years or 10 complete and consecutive years after the first regulatory approval of Elafin for this indication. Under no circumstances are the payments refundable, even if the drug is never commercialized. As no revenue sharing payments will be made unless Elafin is commercialized, the payments received are being accounted for as payments for the Company to use reasonable efforts to complete development, obtain regulatory approvals, and to commercialize Elafin (i.e. the performance period). Therefore, amounts received from the party will be deferred and recognized as revenue over the projected performance period under the Development Agreement in relation to expenses incurred. From inception of the Development Agreement through September 30, 2015, management estimated total Elafin related development expenses at €3.5 million. As revenues to be received also totaled €3.5 million, revenue was recognized at 100% of the related expenses incurred. Beginning October 1, 2015, management increased their estimate of remaining development expenses by €3.5 million and began recognizing revenues at 43% of related expenses. The increase in expenses was due to additional clinical indicators that will be explored by the Company. For the years ended December 31, 2018 and 2017, the Company recognized approximately $99,000 and $199,000, respectively, of development income under the Development Agreement, which is included in revenues in the accompanying consolidated statements of operations and comprehensive income (loss). Deferred revenues approximated $0 and $83,000 at December 31, 2018 and 2017, respectively. At this time, we believe it is unlikely that the Company will receive any future amounts under the Development Agreement.

5. DEVELOPMENT AGREEMENT

12 Months Ended

Dec. 31, 2018

5. DEVELOPMENT AGREEMENT

On May 16, 2014, the Company entered into a funding and revenue sharing agreement (the “Development Agreement”) with an unrelated third party. The third party will fund operational expenses of the Company as well as the development costs related to the clinical development program aimed at receiving regulatory approval for the use of Elafin for the intravenous treatment of patients undergoing esophageal cancer surgery in the European Union. Total payments by the third party to the Company shall not exceed €3.5 million (approximately $4 million). Through December 31, 2018, the Company received approximately €1.6 million of the €3.5 million maximum. Revenue participation right payments will be made to the party when and if Elafin is commercialized within the European Union for the intravenous treatment of patients undergoing esophageal cancer surgery.

The Development Agreement will terminate after the earlier of 15 years or 10 complete and consecutive years after the first regulatory approval of Elafin for this indication. Under no circumstances are the payments refundable, even if the drug is never commercialized. As no revenue sharing payments will be made unless Elafin is commercialized, the payments received are being accounted for as payments for the Company to use reasonable efforts to complete development, obtain regulatory approvals, and to commercialize Elafin (i.e. the performance period). Therefore, amounts received from the party will be deferred and recognized as revenue over the projected performance period under the Development Agreement in relation to expenses incurred.

From inception of the Development Agreement through September 30, 2015, management estimated total Elafin related development expenses at €3.5 million. As revenues to be received also totaled €3.5 million, revenue was recognized at 100% of the related expenses incurred. Beginning October 1, 2015, management increased their estimate of remaining development expenses by €3.5 million and began recognizing revenues at 43% of related expenses. The increase in expenses was due to additional clinical indicators that will be explored by the Company.

For the years ended December 31, 2018 and 2017, the Company recognized approximately $99,000 and $199,000, respectively, of development income under the Development Agreement, which is included in revenues in the accompanying consolidated statements of operations and comprehensive income (loss). Deferred revenues approximated $0 and $83,000 at December 31, 2018 and 2017, respectively. At this time, we believe it is unlikely that the Company will receive any future amounts under the Development Agreement.