2.4.0.8111 - Disclosure - License and Collaborative Agreementstruefalsefalse1falsefalsefalseP01_01_2013To06_30_2013http://www.sec.gov/CIK0001124608duration2013-01-01T00:00:002013-06-30T00:00:001true1rgdx_LicenseAndCollaborativeAgreementsAbstractrgdx_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse02false2rgdx_CollaborativeAndLicenseArrangementDisclosureTextBlockTextBlockrgdx_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalseverboseLabel1falsefalsefalse00 <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>6. License and Collaborative Agreements</strong></div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong><em>License Agreement with the University of Southern California (“USC”)</em></strong></div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In April 2000, as amended in June 2002 and April 2005, the Company entered into a license agreement with USC. Under this agreement, USC granted the Company a worldwide, exclusive license with the right to sublicense, the patents for nucleic acid extraction methodologies (“RGI-1”) and related technology, for use in human and veterinary diagnostic laboratory services, the sale of clinical diagnostic products, and the sale of research products to the research community. USC retains the right under the agreement to use the technology for research and educational purposes.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In consideration for this license, the Company agreed to pay USC royalties based on a percentage of net sales of products or services that make use of RGI-1 and related technology and to meet a certain minimum in royalty payments. Royalty expense relating to this agreement amounted to $<font style=" FONT-SIZE: 10pt">75,938</font> and $<font style=" FONT-SIZE: 10pt">86,908</font> for the three months ended June 30, 2012 and 2013, respectively, and $132<font style="BACKGROUND-COLOR: transparent; COLOR: black">,440</font> and $<font style=" FONT-SIZE: 10pt">191,014</font> for the six months ended June 30, 2012 and 2013, respectively. Such expense is included in cost of revenue in the accompanying consolidated statements of operations and comprehensive loss.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong><em>License Agreement with Roche Molecular Systems (“Roche”)</em></strong></div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In November 2004, the Company entered into a non-exclusive license to use Roche’s technology including specified nucleic acid amplification processes (“PCR Processes”) to perform certain human invitro clinical laboratory services. In consideration for this license, the Company is obligated to pay royalties to Roche, based on a percentage of net sales of products or services that make use of the PCR Processes. Royalty expense included in cost of revenue relating to this agreement amounted to $<font style=" FONT-SIZE: 10pt">80,418</font> and $<font style=" FONT-SIZE: 10pt">84,362</font> for the three months ended June 30, 2012 and 2013, respectively and $<font style=" FONT-SIZE: 10pt">143,887</font> and $<font style=" FONT-SIZE: 10pt">174,507</font> for the six months ended June 30, 2012 and 2013, respectively. </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In November 2004, the Company also entered into an agreement with Roche, pursuant to which the Company is collaborating with Roche to produce commercially viable assays used in the validation of genetic markers for pharmaceutical companies. Specifically, the Company has licensed the rights to Roche to use the pre-diagnostic assays the Company develops in the course of using its RNA-extraction technologies to provide testing services to pharmaceutical companies and to produce diagnostic kits that then can be sold commercially to those pharmaceutical companies. Roche is required to pay the Company royalties of a certain percentage of net sales of such diagnostic kits sold to pharmaceutical companies. As of June 30, 2103, Roche is not using or marketing any  <font style="LINE-HEIGHT: 115%; FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> products that use these technologies and as such has no royalty payment obligations</font> to the Company pursuant to this agreement.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong><em>Services Agreement with Taiho Pharmaceutical Co., Ltd. (“Taiho”)</em></strong></div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In July of 2001, the Company entered into an agreement with Taiho pursuant to which the Company provides Taiho with RGI-1 generated molecular-based tumor analyses for use in guiding chemotherapy treatment for cancer patients and for use in Taiho’s business of developing and marketing pharmaceutical and diagnostic products for use against cancer. Pursuant to the agreement, as amended, the Company appointed Taiho as the exclusive purchaser in Japan of tests and testing services based upon the RGI-1 using gene expression through 2010 for: (i) any one or the combination of specified molecular markers, (ii) the therapeutic use of specified compounds, or (iii) the diagnosis or therapeutic treatment of specified precancerous and cancerous diseases. The Company also granted Taiho the right to be a non-exclusive purchaser in Japan of tests and testing services based upon the RGI-1 using gene expression, other than those for which Taiho has exclusivity, for: (i) any one or combination of molecular markers, (ii) the therapeutic use of any compound or biological product against cancer, or (iii) the diagnosis or therapeutic treatment of precancerous and cancerous diseases.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In consideration for the testing services provided, Taiho paid an upfront payment at the commencement of the agreement and is obligated to pay regular testing fees, covering the specific services performed on a monthly basis. In December 2009, the Company amended its agreement with Taiho and the agreement was renewed for an additional three years. According to the terms of the renewal, Taiho’s appointment as an exclusive purchaser in Japan of certain tests and testing services and its minimum purchasing obligations ended on December 31, 2010 and as such, Taiho was only obligated to purchase tests and testing services based on its needs for 2011 and 2012.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="LINE-HEIGHT: 115%; FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> On July 16, 2013, the Company and Taiho amended and extended the agreement through December 31, 2013.<font style=" FONT-SIZE: 10pt"> </font> The amended agreement was made effective as of January 1, 2013 and governs all testing services the Company provided to Taiho since January 1, 2013. Under the amended agreement, the Company will receive a minimum aggregate of $<font style=" FONT-SIZE: 10pt">955,000</font> for testing services provided to Taiho in Japan on a non-exclusive basis from January 1 to December 31, 2013.</font> Revenue recognized under this agreement for the three months ended June 30, 2012 and 2013 was $<font style=" FONT-SIZE: 10pt">292,675</font> and $<font style=" FONT-SIZE: 10pt">306,260</font> respectively, and for the six months ended June 30, 2012 and 2013 was $<font style="BACKGROUND-COLOR: transparent; COLOR: black"><font style=" FONT-SIZE: 10pt">536,800</font></font> and $<font style=" FONT-SIZE: 10pt">340,180</font> respectively.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong><em>Services Agreement with GlaxoSmithKline, LLC formerly known as SmithKline Beecham Corporation (d.b.a. GlaxoSmithKline or “GSK”)</em></strong></div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In January 2006, the Company entered into a master services agreement with GSK, a leading pharmaceutical manufacturer, pursuant to which the Company provides services in connection with profiling the expression of various genes from a range of human cancers. Under the agreement, the Company provides GSK with testing services as described in individual protocols and GSK pays the Company for such services based on the pricing schedule established for each particular protocol. GSK was obligated to make minimum annual payments to the Company under the agreement and also was obligated to make a non-refundable upfront payment to the Company, to be credited against work undertaken pursuant to the agreement. In January 2006, the Company received an upfront payment of $<font style=" FONT-SIZE: 10pt">2,000,000</font>, which was initially recorded as deferred revenue and subsequently recognized as revenue in prior periods.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In December 2008, the Company amended and restated its master services agreement with GSK and extended the term of the agreement for a <font style=" FONT-SIZE: 10pt">two-year</font> period, with the option for the parties to extend the agreement for additional one-year periods at the end of the term, upon their mutual written agreement. In addition, the Company became a preferred provider to GSK and its affiliates of genetic testing services on a fee-for-service basis and, in anticipation of the services to be provided, GSK agreed to make a non-refundable upfront payment of approximately $<font style=" FONT-SIZE: 10pt">1,300,000</font>, which was received in January 2010. There was no remaining deferred revenue balance associated with this agreement for the periods ended December 31, 2012 or June 30, 2013.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company recognized revenue of $<font style="BACKGROUND-COLOR: transparent; COLOR: black"><font style=" FONT-SIZE: 10pt">145,100</font></font> and $<font style=" FONT-SIZE: 10pt">2,814</font> relating to the GSK agreement for the three months ended June 30, 2012 and 2013, respectively, and $<font style="BACKGROUND-COLOR: transparent; COLOR: black"><font style=" FONT-SIZE: 10pt">222,577</font></font> and $<font style=" FONT-SIZE: 10pt">2,814</font> relating to the GSK agreement for the six months ended June 30, 2012 and 2013, respectively.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;BACKGROUND-COLOR: transparent; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong><em>Non-Exclusive License Agreement with GSK</em></strong></div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In March 2010, the Company entered into a non-exclusive license agreement with GSK. Under the agreement, the Company granted GSK a non-exclusive, sublicenseable license to its proprietary PCR analysis technology and diagnostic expertise to assess BRAF gene mutations in human tumor samples. As part of the agreement, the Company received a non-refundable technology access fee in consideration for the transfer of the Company’s technology to GSK. The agreement also contains milestone provisions which would allow the Company to earn further payments from GSK. In May 2013, the Company earned and recorded as revenue a second milestone payment under the agreement of $<font style=" FONT-SIZE: 10pt">500,000</font>.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong><em>Master Services Agreement with GlaxoSmithKline Biologicals S.A. (“GSK Bio”)</em></strong></div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> On July 26, 2012, the Company entered into a second amended and restated master services agreement with GSK Bio, the vaccine division of GSK. Pursuant to this agreement, which has an effective date of May 15, 2012, the Company provides testing services for clinical trials and epidemiology studies relating to GSK Bio’s cancer immunotherapies. The Company performs these testing services on a fee-for-service basis as embodied in written task orders. GSK Bio retains the intellectual property rights to inventions, improvements and data resulting from the services performed under the agreement. The Company retains all intellectual property rights to its testing services, proprietary processes and all accompanying patent information owned by the Company. All intellectual property owned by either party on the date of the agreement remains the exclusive property of the owning party.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The agreement will expire on December 31, 2014, provided that any outstanding task orders at the time of termination will not thereby terminate (unless otherwise agreed in writing by the parties), and any such task orders will continue for the respective terms specified in such task orders (and the parties shall continue to perform their obligations thereunder). GSK Bio may terminate the agreement, without cause, upon <font style=" FONT-SIZE: 10pt"> 90</font> days’ written notice to the Company. The Company may terminate the agreement, without cause, upon one year’s written notice to GSK Bio. The agreement may also be terminated early if either party enters bankruptcy or similar proceedings or in the event of a material breach. GSK Bio may terminate the agreement immediately if the Company experiences a “change of control,” as defined in the agreement.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The agreement also provides for mutual indemnification by the parties and contains customary representations, warranties and covenants, including covenants governing the parties’ use of confidential information and representations regarding adequate insurance coverage or self-insurance.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company recognized revenue of $<font style="BACKGROUND-COLOR: transparent; COLOR: black"><font style=" FONT-SIZE: 10pt">90,817</font></font> and $<font style=" FONT-SIZE: 10pt">1,176,361</font> relating to the services performed for GSK Bio for the three months ended June 30, 2012 and 2013, respectively, and $<font style="BACKGROUND-COLOR: transparent; COLOR: black"><font style=" FONT-SIZE: 10pt">732,428</font></font> and $<font style=" FONT-SIZE: 10pt">2,532,745</font> for the six months ended June 30, 2012 and 2013, respectively.</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong><em>Commission Agreement with Hitachi Chemical Co., Ltd.</em></strong></div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> On July 26, 2007, the Company entered into a collaboration agreement with Hitachi, a leading diagnostics manufacturer in Japan. Under the terms of this agreement, Hitachi used the Company's proprietary and patented techniques to extract genetic information from FFPE tissue samples collected in Southeast Asia, Australia and New Zealand. As part of this collaboration agreement, the Company provides Hitachi with the technical information and assistance necessary to perform the testing services. Hitachi is responsible for expenses related to the cost of laboratory equipment and modification to the laboratory facilities, as well as the cost of reagents. The Southeast Asian countries covered under this agreement include Japan, North Korea, South Korea, Taiwan, Mongolia, Pakistan, Bangladesh, Sri Lanka, Nepal, Singapore, Malaysia, Indonesia, Brunei, Thailand, Myanmar, Laos, Cambodia, Vietnam and the Philippines (the “Territory”).</div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="clear:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN: justify; BACKGROUND-COLOR: transparent; TEXT-INDENT: 0.25in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The collaboration agreement had an initial term expiring on June 30, 2010, with an automatic renewal for <font style=" FONT-SIZE: 10pt">one year</font> at the end of the original period under the same terms and conditions. Pursuant to the agreement, Hitachi performed certain testing services and received a percentage of the revenue collected from the Company's clients in the Territory, which totaled $<font style=" FONT-SIZE: 10pt">149,175</font> and $<font style=" FONT-SIZE: 10pt">0</font> for the three months ended June 30, 2012 and 2013, respectively, and $<font style=" FONT-SIZE: 10pt">235,095</font> and $<font style=" FONT-SIZE: 10pt">0</font> for the six months ended June 30, 2012 and 2013, respectively. These amounts were recorded as cost of revenue in the consolidated statement of operations and comprehensive loss. Due to the closing of Hitachi’s applicable facility in the Territory, the Company and Hitachi agreed to terminate this agreement effective September 30, 2012.</div> </div> falsefalsefalsenonnum:textBlockItemTypenaEntire disclosure for license and collaborative agreements.No definition available.false0falseLicense and Collaborative AgreementsUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://www.responsegenetics.com/role/LicenseAndCollaborativeAgreements12