Collaboration and Licensing Agreements

3 Months Ended

Mar. 31, 2020

Collaboration and Licensing Agreements

Collaboration and Licensing Agreements

3. Collaboration and Licensing Agreements

Gilead Collaboration and License Agreement

In June 2018, the Company entered into the Gilead Agreement whereby the Company and Gilead agreed to collaborate with respect to two preclinical research programs to evaluate potential vaccine products for the treatment, cure, diagnosis or prevention of HBV and HIV.

Under the Gilead Agreement, the Company granted Gilead an exclusive, royalty-bearing license to the Company’s technology platforms. Upon entering into the agreement, the Company received a non-refundable $10.0 million upfront payment from Gilead. Gilead is also obligated to make additional payments to the Company upon the achievement of pre-clinical, development and commercial milestones. The development milestones amount to a total of $280 million. The commercial milestones amount to a total of $100 million. Additionally, Gilead is obligated to pay royalties on net sales for each program. All payments from Gilead have a 60 days payment term.

The $10.0 million upfront payment received in 2018 and a $4.0 million milestone payment received in the three months ended March 31, 2020 were initially recorded as deferred revenue in the consolidated balance sheet and are recognized as revenue when revenue recognition criteria are met. As of March 31, 2020, $5.5 million of upfront and milestone payments were included as a liability in deferred revenues, current and non-current. Approximately 68% of deferred revenue as of March 31, 2020 is expected to be recognized as revenue in the remainder of 2020, 28% in 2021 and the remaining 4% in 2022.

In the three months ended March 31, 2020, the Company recognized $0.4 million of the upfront payment and $0.6 million of the $4.0 million milestone payment received in that period. In addition, the Company recognized $2.7million revenue from cost reimbursements for research and development services in the three months ended March 31, 2020. For the three months ended March 31, 2019, revenue from reimbursement of research and development expenses was $1.3 million, and revenue from partial recognition of the upfront payment was $0.9 million.

Sublicense fees payable to certain licensors of technologies upon the receipt of the deferred upfront and milestone payments, were capitalized as a contract asset and will be amortized over the period in which the revenue from the triggering payment is recognized. As of March 31, 2020 and December 31, 2019, the contract asset and the liability relating to the sublicense payment was $0.3 million and $0.3 million, respectively.