Other operating income

9 Months Ended

Sep. 30, 2020

Other Income and Expenses [Abstract]


	Three months ended September 30,		Nine months ended September 30,
	2020			2019		2020		2019
	(in thousands)
Analysis of other operating income by
category
Income recognized in respect of BARDA	$	1,607		$	4,228	$	7,715	$	14,251
Grant income	143			227		334		775
Research and development credit	2,559			1,841		6,900		4,855
	$	4,309		$	6,296	$	14,949	$	19,881

BARDA

In September 2017, the Company was awarded a funding contract from the Biomedical Advanced Research and Development Authority ("BARDA"), an agency of the US government's Department of Health and Human Services' Office of the Assistant Secretary for Preparedness and Response, to fund a specified portion of the clinical and regulatory development activities of ridinilazole for the treatment and reduction of recurrence of CDI.

Under the terms of this contract, the Company was initially eligible to receive base period funding of $32 million. In addition, the contract included three option work segments that, if exercised in full by BARDA, would increase the total federal government funding under the contract to approximately $62 million. In August 2018, BARDA exercised one of the option work segments worth $12 million. In June 2019, BARDA increased the total value of the funding contract to up to $63.7 million; at this time, BARDA also exercised a second of the option work segments worth $9.6 million to bring the total amount of committed BARDA funding to $53.6 million. In January 2020, BARDA increased its award by $8.8 million to bring the total amount of the funding contract to $72.5 million and the total amount of committed BARDA funding to $62.4 million. The remaining federal government funding is dependent on BARDA in its sole discretion exercising the final independent option work segment, upon the achievement by the Company of certain agreed-upon milestones for ridinilazole. As of September 30, 2020, an aggregate of $47.0 million of the total committed BARDA funding had been received and the Company has recognized $42.8 million of cumulative income since contract inception.

CARB-X

In July 2018, the Company was granted a sub-award of up to $4.5 million from the Trustees of Boston University under the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator program ("CARB-X"). Under the CARB-X award, the Company received an initial $2.0 million in funding from CARB-X in July 2018. In February 2020, CARB-X increased the value of the initial funding by $1.2 million. The remaining $2.5 million was split into two option segments. With the Company's decision not to advance the DDS-01 series of antibiotics and to cease work on the gonorrhea program, it is expected CARB-X will cover its remaining share of the work that has been funded under the award.

During the three and nine months ended September 30, 2020, the Company recognized grant income from CARB-X of $0.1 million and $0.3 million , respectively (three and nine months ended September 30, 2019: $0.2 million and $0.8 million, respectively).

Research and development credits

The Company receives tax credits from research and development ("R&D") in the UK. As a company that carries out extensive research and development activities, we seek to benefit from two UK R&D tax credit cash rebate regimes: Small and Medium Enterprise, or SME, Program and the Research and Development Expenditure Credit ("RDEC") Program. Qualifying expenditures largely comprise employment costs for research staff, consumables, a proportion of relevant, permitted sub-contract costs and certain internal overhead costs incurred as part of research projects for which we do not receive income. Tax credits related to the SME Program and RDEC are recorded as other operating income, as they are similar to grant income, in the consolidated statements of operations and other comprehensive (loss)/income. Under both schemes, the Company receives cash payments.

Based on criteria established by Her Majesty’s Revenue and Customs ("HMRC"), a portion of expenditures being carried in relation to our pipeline research and development, clinical trials management and third-party manufacturing development activities are eligible for the SME regime and we expect such elements of expenditure will also continue to be eligible for the SME regime for future accounting periods.