Significant Agreements

9 Months Ended

Sep. 30, 2024

Revenue Recognition [Abstract]

Significant Agreements

Significant Agreements

We often enter into license agreements and collaborative arrangements to develop and commercialize drug candidates or sell the rights of a product.

Our license agreements generally provide for nonrefundable upfront license fees, development and commercial-performance milestone payments, and royalties. See Note 1, The Business and Summary of Significant Accounting Policies, for additional discussion of revenues recognized under these types of arrangements.

Collaborative arrangements may include research and development and manufacturing activities for which we may receive from collaboration partners expense reimbursements. Our collaboration arrangements are performed with no guarantee of either technological or commercial success, and each arrangement is unique in nature. Operating expenses for costs incurred pursuant to these arrangements are reported in their respective expense line items in the Consolidated Statements of Operations and Comprehensive Loss, net of any reimbursements due from our collaboration partners, with such reimbursements being recognized at the time the party becomes obligated to pay. We record payments received from our collaborative partners for their share of the development costs as a reduction of Research and development expenses.

Emergent BioSolutions, Inc.

On September 26, 2022, the Company completed the sale to Emergent of the Company’s exclusive worldwide rights to brincidofovir, including TEMBEXA and specified related assets (the Asset Sale). Emergent paid the Company an upfront cash payment of approximately $238 million upon the closing of the Asset Sale. In addition, pursuant to the Asset Purchase Agreement, the Company is eligible to receive from Emergent: (i) up to an aggregate of approximately $124 million in milestone payments payable upon the exercise of the options under the BARDA Agreement for the delivery of up to 1.7 million treatment courses of tablet and suspension formulations of TEMBEXA to the U.S. government; (ii) royalty payments equal to 15% of the gross profits from the sales of TEMBEXA made outside of the United States; (iii) royalty payments equal to 20% of the gross profits from the sales of TEMBEXA made in the United States in excess of 1.7 million treatment courses; and (iv) up to an additional $12.5 million upon the achievement of certain other developmental milestones. The effects of recording certain adjustments associated with contingent consideration related to TEMBEXA have been excluded as the Company has made a policy election to account for these amounts when the contingency has been resolved in accordance with Accounting Standards Codification (ASC) 450, Contingencies. In September 2024, BARDA and Emergent agreed to amend the terms of the BARDA Agreement; in connection with that amendment, CLIN0004A and CLIN0005A were exercised for $67.4 million. The Company accounts for milestone payments due under ASC 450-30 - Contingencies - Gain Contingencies (ASC 450-30), and has calculated the milestone payment to be approximately $2.7 million related to the exercise of CLIN0004A and CLIN0005A. The Company would realize this amount upon receipt of the milestone payment.

The period under which the Company was contracted to provide the majority of operational support services to Emergent in furtherance of its obligations under the Asset Purchase Agreement and the BARDA Agreement concluded on March 26, 2023, except for certain services which the parties agreed would continue until the occurrence of a specific event, or in some cases a predetermined end date. The BARDA Agreement was novated to Emergent in December 2022. The Company recognized $2,000 of contract revenue for support provided for the three and nine months ended September 30, 2024. The Company recognized $11,000 and $0.2 million of contract revenue for support provided to Emergent for the three and nine months ended September 30, 2023, respectively.

Ohara Agreement

In 2019, Oncoceutics, Inc., a Delaware corporation (Oncoceutics) which was subsequently acquired by the Company in January 2021, entered into a license, development and commercialization agreement with Ohara Pharmaceutical Co., Ltd. (Ohara) for dordaviprone in Japan (the “Ohara License Agreement”). The Company is entitled to receive up to $2.5 million in nonrefundable regulatory milestone payments. The Company is entitled to double-digit tiered royalties based on the aggregate annual net sales of all products, as defined in the agreement, in Japan.

In September 2024, the Company entered into an addendum to its license, development and commercialization agreement with Ohara in which the parties agreed to collaboratively conduct development activities for dordaviprone in Japan, including expanding the ACTION Study into Japan (the “Ohara License Addendum”). Under the Ohara License Addendum, Ohara agreed to reimburse the Company for certain of its development costs incurred from its sponsorship of the ACTION Study in Japan, including fixed overhead payments totaling $3.3 million paid in quarterly installments through December 31, 2026, as well as site activation and subject enrollment-based payments. Amounts due under the Ohara License Addendum will be recognized in accordance with ASC 808 Collaborative Arrangements, as this agreement meets both requirements of a collaborative arrangement outlined in that guidance.

During the three and nine months ended September 30, 2024, we recorded $0.5 million of reductions of Research and Development expenses for Ohara's share of development costs.

CR Sanjiu Agreement

In December 2020, Oncoceutics entered into a license, development and commercialization agreement with China Resources Sanjiu Medical & Pharmaceutical Co., Ltd. (CR Sanjiu). Oncoceutics granted CR Sanjiu an exclusive royalty bearing license to develop and commercialize dordaviprone in China, Hong Kong, Macau and Taiwan (CR Sanjiu Territory). The Company is entitled to receive up to $5.0 million in nonrefundable regulatory milestone payments. The Company is entitled to double-digit tiered royalties based on the aggregate annual net sales of all licensed products, as defined in the agreement, in the CR Sanjiu Territory.