Note 4 - Licences, Royalty Collaborative and Contractual Arrangements

9 Months Ended

Mar. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Collaborative Arrangement Disclosure [Text Block]

(4) Licenses, Royalty Collaborative and Contractual Arrangements

Royalty agreements

The Company entered into a royalty-bearing research and license agreement with GSK in 1990 for the development and commercialization of zanamivir, a NI currently marketed by GSK as Relenza^® to treat influenza. Under the terms of the agreement, the Company licensed zanamivir to GSK on an exclusive, worldwide basis and is entitled to receive royalty payments of 7% of GSK's annual net sales of Relenza^® in the U.S., Europe, Japan and certain other countries as well as 10% of GSK's annual net sales of Relenza^® in Australia, New Zealand, South Africa and Indonesia. Beginning in late 2014, patents related to Relenza^® are scheduled to expire in certain countries, including the United States, and are scheduled to fully expire in 2019.

The Company entered into collaboration and license agreement with Daiichi Sankyo in 2003 related to the development of second generation, long-acting NI’s, including laninamivir octanoate. Under the collaboration and license agreement, the Company and Daiichi Sankyo cross-licensed the right to develop, make, use, sell or offer for sale, or import products based on the parties respective intellectual property related to their long acting NI’s. The initial primary focus of the agreement was for the parties to collectively seek third-party licensees that could develop and commercialize the related long-acting NI’s on a worldwide basis. In the event that the related intellectual property was out-licensed to a third party, the Company and Daiichi Sankyo agreed to share equally in any future royalties, license fees, milestones or other payments received from such a licensee. Further, although it was the intention of the parties to seek a third-party licensee or licensees worldwide, the parties retained the right to market or co-market related products in the U.S. and other markets outside of Japan, and any sales made by either party in the U.S. would result in the selling party paying the other party a royalty rate that was half of the royalty rate paid by any other third-party licensee. To date, there have been no third-party licenses granted pursuant to this agreement, and therefore, a royalty rate on net sales outside of Japan has not been established under the 2003 agreement.

In March 2009, the Company entered into a commercialization agreement with Daiichi Sankyo, pursuant to which Daiichi Sankyo obtained exclusive marketing rights in Japan for the long-acting NI’s, including laninamivir octanoate, covered by the 2003 collaboration and license agreement between the parties. In consideration for these rights, Daiichi Sankyo agreed to pay the Company a royalty rate equal to 4% or potentially higher in certain circumstances, on net sales in Japan. In September 2010, laninamivir octanoate (Inavir^®) was approved for sale by the Japanese Ministry of Health and Welfare for the treatment of influenza A and B in adults and children. In December 2013, Daiichi Sankyo was also granted regulatory approval in Japan to manufacture and market Inavir^® for the prevention of influenza A and B. Accordingly, under this agreement the Company currently receives a 4% royalty on net sales of Inavir^® in Japan and is eligible to earn additional sales milestone payments. Patents on laninamivir octanoate in Japan generally expire in 2024.

Collaborative and contract arrangements

In March 2011, the Company’s wholly owned subsidiary, Biota Scientific Management Pty Ltd., was awarded a contract by BARDA for the late-stage development of laninamivir octanoate on a cost-plus-fixed-fee basis, the total of which is not to exceed $231.2 million. BARDA is part of ASPR within the HHS. The BARDA contract was intended to fund and provide the Company with all technical and clinical data and U.S. based manufacturing to support the filing of a NDA with the FDA for laninamivir octanoate. On May 7, 2014, the Company was notified by ASPR/BARDA of its decision to terminate the contract for the development of laninamivir octanoate for the convenience of the U.S. government. The decision to terminate for convenience was the result of a recently concluded IPR. The performance period of the BARDA contract commenced on March 31, 2011 and will end twelve months from the date of termination on May 7, 2014, unless otherwise extended for final termination costs.

The Company is considered an active participant in the BARDA contract, with exposure to significant risks and rewards of commercialization relating to the development of laninamivir octanoate. Therefore, revenues from and costs associated with the contract are recorded and recognized on a gross basis in the consolidated statement of operations.

The termination of the BARDA contract could result in expenses or charges we incur not being reimbursed by BARDA, or otherwise adversely affect the Company’s financial condition and/or results of operations.

The following tables summarize the key components of the Company’s revenues from Licenses, Royalty Collaborative and Contractual Arrangements (in millions):

	Three Months Ended March 31
	(in millions)
	2014		2013
Royalty revenue – Relenza®	$	4.2	$	1.7
– Inavir®		3.9		3.2
Revenue from services		21.4		4.8
Milestones and other revenue		-		2.8
Total revenue	$	29.5	$	12.5

	Nine Months Ended March 31
	(in millions)
	2014		2013
Royalty revenue– Relenza®	$	9.7	$	2.7
– Inavir®		4.4		4.1
Revenue from services		46.1		14.5
Milestones and other revenue		0.1		3.0
Total revenue	$	60.3	$	24.3