(6)

Collaborative Agreements

In January 2010, we signed a research collaboration and license agreement (the Agreement) with Novartis to discover and develop novel treatments for hearing loss and balance disorders. Under the terms of the Agreement, we licensed the world-wide rights to our preclinical hearing loss and balance disorders program.The Agreement was extended in January 2012 and again in January 2013. Under the extensions, Novartis will fund research at GenVec through January 2014 to support the preclinical hearing loss and balance disorders program. When the Agreement was executed in January 2010, we received a $5.0 million non-refundable upfront license fee and Novartis purchased $2.0 million of our common stock. The common stock was recorded at fair value of $3.3 million on the date of issuance. The non-refundable upfront license fee was recognized ratably over the original two-year research and collaboration term of the Agreement. Due to the pricing agreement associated with the sale of our common stock, revenue recognized from the non-refundable upfront license fee was $3.7 million by the end of the initial Agreement, as extended, in January 2014. In addition, we will receive funding from Novartis for a research program focused on developing additional adenovectors for hearing loss. No revenue from the upfront license fee was recognized during the three months ended June 30, 2013 or 2012. There was $118,000 and $198,000 of revenue recognized for research performed under the Agreement for the three months ended June 30, 2013 and 2012, respectively. During the six months ended June 30, 2013 and 2012 we recognized $0 and $78,000, respectively, of the upfront payment and $252,000 and $429,000, respectively, for research performed under the Agreement.

Under the Agreement, we are eligible to receive milestones payments of up to $206.6 million, including up to $0.6 million for the achievement of preclinical development activities, up to $26.0 million for the achievement of clinical milestones (including non-rejection of an investigational new drug with respect to a covered product, the first patient visit in Phase I, Phase IIb, and Phase III clinical trials), up to $45.0 million for the receipt of regulatory approvals and up to $135.0 million for sales milestones. We have recognized $600,000 of milestone payments as a result of the successful completion of preclinical development activities prior to 2012. There were no milestones achieved in 2012 or during the six months ended June 30, 2013.

In August 2010, we signed an agreement with Novartis for the supply of services relating to development materials in connection with the companies' collaboration on the hearing loss and balance disorders program. Under this agreement, GenVec could receive approximately $13.0 million over four years to manufacture clinical trial material for up to two lead candidates. During the three months ended June 30, 2013 and 2012 we recognized $0.1 million and $1.0 million, respectively, for services performed under this agreement. During the six months ended June 30, 2013 and 2012 we recognized $0.3 million and $2.2 million, respectively, for services performed under this agreement.

In September 2012, we signed an agreement worth approximately $3.5 million with the U.S. Naval Medical Logistics Command to support malaria vaccine developmentefforts at the U.S. Naval Medical Research Center (NMRC). Under the terms of the agreement, GenVec was responsible for producing clinical supplies of its malaria vaccine, which utilizes its novel, proprietary technology. NMRC used the clinical material as part of its efforts to assess the safety and efficacy of these next-generation vectored vaccines using the clinical challenge model developed by NMRC and the Walter Reed Army Institute of Research (WRAIR) malaria vaccine programs, which now are unified as the U.S. Military Malaria Vaccine Program (USMMVP). Under the agreement, GenVec retains the right to commercialize this novel technology. No revenue was recognized under this contract during the three and six month periods ended June 30, 2013 or 2012. See Note 9, Subsequent Event, for a description of the modification of this agreement.

In April 2013, the National Institutes of Allergy and Infectious Diseases (NIAID) of the National Institutes of Health (NIH) announced that it will stop administering injections in its HVTN 505 clinical trial of an investigational HIV vaccine regimen because an independent data and safety monitoring board (DSMB) found during a scheduled interim review that the vaccine regimen did not prevent HIV infection nor reduce viral load (the amount of HIV in the blood) among vaccine recipients who later became infected with HIV. The HVTN 505 trial was designed to test the safety and efficacy of a two-part HIV vaccine regimen consisting of one vaccine designed to prime the immune system followed by another vaccine designed to boost the immune response. GenVec manufactured the adenovirus vector component utilized as the boost vaccine for this trial.