ViiV Healthcare Company and Glaxosmithkline Collaboration	9 Months Ended
Sep. 30, 2011
Business Overview and ViiV Healthcare Company and Glaxosmithkline Collaboration [Abstract]
ViiV HEALTHCARE COMPANY AND GLAXOSMITHKLINE COLLABORATION	6. ViiV HEALTHCARE COMPANY AND GLAXOSMITHKLINE COLLABORATION In February 2009, we entered into a license agreement which granted GSK an exclusive worldwide license to develop, manufacture and commercialize our NNRTI compounds, including ‘761, for the treatment of human diseases, including HIV/AIDS. We also entered into a stock purchase agreement with GSK in February 2009, which we refer to as the GSK stock purchase agreement. Under the GSK stock purchase agreement, GSK purchased approximately 2.5 million shares of our common stock at an aggregate purchase price of $17.0 million, or a per share price of $6.87. These agreements became effective in March 2009. In October 2009, GSK assigned this license agreement to ViiV, an affiliate of GSK. In March 2009, we received $34.0 million related to this collaboration, which consisted of a $17.0 million license fee payment under the ViiV license agreement and $17.0 million under the GSK stock purchase agreement. In May 2010, we received a $6.5 million milestone payment related to the achievement of a preclinical operational milestone and in November 2010, we received a $20.0 million milestone payment for the initiation of a phase IIb clinical study related to the development of ‘761. These milestone payments did not meet our revenue recognition criteria for immediate recognition and are being recognized over the term of the agreement. Pursuant to the ViiV license agreement, we could also potentially receive up to $390.0 million in additional milestone payments as well as double-digit tiered royalties on worldwide product sales. The parties have agreed that if ViiV, its affiliates or its sublicensees desire to develop ‘761 for an indication other than HIV, or if ViiV intends to develop any other licensed compound for any indication, the parties will mutually agree on a separate schedule of milestone and royalty payments prior to the start of development. The ViiV license agreement has performance obligations, including joint committee participation and ViiV’s right to license other NNRTI compounds that we may develop in the future, that we have assessed under the FASB guidance related to multiple element arrangements, prior to the implementation of ASU No. 2009-13. We concluded that this arrangement should be accounted for as a single unit of accounting and recognized using the contingency adjusted performance method. The $43.5 million payments from ViiV were recorded as deferred revenue and are being recognized as revenue over the life of the agreement, which is estimated to be 17 years. A cumulative catch-up was recognized for the period from the execution of the license agreement in March 2009 through the period in which milestone payments were received. We recognized $0.7 million and $0.4 million of collaboration revenue for the three months ended September 30, 2011 and 2010, respectively, and recognized $2.0 million and $1.4 million of collaboration revenue for the nine months ended September 30, 2011 and 2010, respectively. We recorded $36.7 million and $38.7 million of deferred revenue as of September 30, 2011 and December 31, 2010, respectively, related to payments received from ViiV. In February 2011, ViiV informed us that the FDA placed ‘761 on clinical hold. ViiV has full responsibility for the development of ‘761, including any regulatory interactions.

6. ViiV HEALTHCARE COMPANY AND GLAXOSMITHKLINE COLLABORATION

In February 2009, we entered into a license agreement which granted GSK an exclusive worldwide license to develop, manufacture and commercialize our NNRTI compounds, including ‘761, for the treatment of human diseases, including HIV/AIDS. We also entered into a stock purchase agreement with GSK in February 2009, which we refer to as the GSK stock purchase agreement. Under the GSK stock purchase agreement, GSK purchased approximately 2.5 million shares of our common stock at an aggregate purchase price of $17.0 million, or a per share price of $6.87. These agreements became effective in March 2009. In October 2009, GSK assigned this license agreement to ViiV, an affiliate of GSK.

In March 2009, we received $34.0 million related to this collaboration, which consisted of a $17.0 million license fee payment under the ViiV license agreement and $17.0 million under the GSK stock purchase agreement. In May 2010, we received a $6.5 million milestone payment related to the achievement of a preclinical operational milestone and in November 2010, we received a $20.0 million milestone payment for the initiation of a phase IIb clinical study related to the development of ‘761. These milestone payments did not meet our revenue recognition criteria for immediate recognition and are being recognized over the term of the agreement. Pursuant to the ViiV license agreement, we could also potentially receive up to $390.0 million in additional milestone payments as well as double-digit tiered royalties on worldwide product sales. The parties have agreed that if ViiV, its affiliates or its sublicensees desire to develop ‘761 for an indication other than HIV, or if ViiV intends to develop any other licensed compound for any indication, the parties will mutually agree on a separate schedule of milestone and royalty payments prior to the start of development.

The ViiV license agreement has performance obligations, including joint committee participation and ViiV’s right to license other NNRTI compounds that we may develop in the future, that we have assessed under the FASB guidance related to multiple element arrangements, prior to the implementation of ASU No. 2009-13. We concluded that this arrangement should be accounted for as a single unit of accounting and recognized using the contingency adjusted performance method. The $43.5 million payments from ViiV were recorded as deferred revenue and are being recognized as revenue over the life of the agreement, which is estimated to be 17 years. A cumulative catch-up was recognized for the period from the execution of the license agreement in March 2009 through the period in which milestone payments were received. We recognized $0.7 million and $0.4 million of collaboration revenue for the three months ended September 30, 2011 and 2010, respectively, and recognized $2.0 million and $1.4 million of collaboration revenue for the nine months ended September 30, 2011 and 2010, respectively. We recorded $36.7 million and $38.7 million of deferred revenue as of September 30, 2011 and December 31, 2010, respectively, related to payments received from ViiV.

In February 2011, ViiV informed us that the FDA placed ‘761 on clinical hold. ViiV has full responsibility for the development of ‘761, including any regulatory interactions.