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Government Contracts
6 Months Ended
Jun. 30, 2016
Contractors [Abstract]  
Government Contracts
Government Contracts
Certain of the Company’s drug discovery and development activities are performed under contracts with U.S. government agencies. Management has determined that the Company is the principal participant in the following contract arrangements, and, accordingly, the Company records amounts earned under the arrangements as revenue. Costs incurred under revenue contracts are recorded as operating expenses in the Company's consolidated statements of operations.
Biomedical Advanced Research and Development Authority
In August 2010, the Company was awarded a contract with the Biomedical Advanced Research and Development Authority (“BARDA”) for the development, manufacturing, nonclinical and clinical evaluation of, and regulatory filings for, plazomicin as a countermeasure for disease caused by antibiotic-resistant pathogens and biothreats. The original contract included committed funding of $27,600,000 for the first two years of the contract and subsequent options exercisable by BARDA to provide additional funding. In September 2012, BARDA exercised an additional $15,798,000 contract option ("Option 1"), which increased the total contract committed funding to $43,398,000 through March 2014. In April 2013, the Company was awarded an additional $60,410,000 under the contract to support its Phase 3 clinical trial of plazomicin ("Option 2") to increase the total committed funding under this contract to $103,808,000. On May 26, 2016, the Company was awarded an additional $20 million ("Option 3") under the contract to support its Phase 3 EPIC trial of plazomicin. This brings the total committed funding under the contract to $123,808,000. The Company recorded contract revenue of $8,510,000 and $4,876,000 under this agreement during the three-month periods ended June 30, 2016 and 2015, respectively, and $13,780,000 and $9,717,000 during the six-month periods ended June 30, 2016 and 2015, respectively.
Defense Threat Reduction Agency
In November 2012, the Defense Threat Reduction Agency (“DTRA”), a division of the U.S. Department of Defense, terminated for convenience a contract with the Company to develop novel antibacterials for the treatment of biodefense pathogens. In connection with the termination, the Company sought payment from DTRA for additional expenses the Company had incurred. Effective April 30, 2015, the Company reached a settlement of its claim with DTRA. The net settlement of $7,122,000 was recorded as contract revenue during the three months ended June 30, 2015. Together with sums previously received, it constitutes complete and final settlement of the contract.
National Institute of Allergy and Infectious Diseases
In July 2015, the Company was awarded a contract by the National Institute of Allergy and Infectious Diseases ("NIAID") for $1.5 million committed through June 30, 2016, with total funding of up to $4.5 million available if all options are exercised under the contract. In January 2016, an additional committed funding of $0.5 million was added to the awarded funding and the total potential funding was increased to $5.0 million. In April 2016, NIAID modified the contract to exercise an option which increased the total contract committed funding to $4.4 million through February 2018, with total potential funding remaining at $5.0 million if the remaining option is exercised.
In July 2014, the Company was awarded a one-year, $407,000 grant by NIAID to conduct discovery research on novel antibiotics targeting gram-negative bacteria. In July 2015, NIAID extended the grant term through July 31, 2016. The Company recorded contract revenue of $634,000 and $43,000 under these agreements during the three-month periods ended June 30, 2016 and 2015, respectively, and $1,213,000 and $82,000 the six-month periods ended June 30, 2016 and 2015, respectively.