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Cephalon Agreement
3 Months Ended
Jul. 31, 2012
Cephalon Agreement [Abstract]  
Cephalon Agreement [Text Block]

Note 9. Cephalon Agreement

 

On March 16, 2011, the Company entered into an agreement with Cephalon, Inc., (“Cephalon”), a wholly-owned subsidiary of Teva Pharmaceutical Industries Ltd., pursuant to which the Company conducts TumorGraft studies on proprietary chemical compounds provided by Cephalon to determine the activity or response of a compound in potential clinical indications. In April 2011, Cephalon paid an initiation fee of $1.4 million to the Company, which was initially reflected within deferred revenue on the Company’s balance sheet as of April 30, 2011. As models, along with required reports, are delivered, the deferred revenue is being recognized on a proportionate basis in accordance with the Company’s revenue recognition policies. Under this agreement, revenues of $177,000 were recognized during the three months ended July 31, 2012. No such revenues were recognized during the three months ended July 31, 2011. The Company anticipates that the studies will be completed within 21months of the execution of the agreement.

 

Cephalon will, under certain conditions, also pay the Company various amounts upon achieving certain milestones. Potential milestone payments that could be received under the Agreement total $27 million. These milestones are based on the performance of the compounds in preclinical testing and are dependent upon testing the compound in clinical settings and obtaining FDA approval. No milestones have been achieved to date. In addition, under certain conditions, Cephalon will pay the Company royalties on any commercialized products developed under the Agreement. No royalties have been received or earned to date. Cephalon reserves the right to exercise and pay a one-time fee of in lieu of the milestone or royalty payments. These fees range from $460,000 to $880,000 per compound.