6. GOVERNMENT CONTRACTS
The Company recognizes revenue from U.S. and European Union (E.U.) government research contracts during the period in which the related expenditures are incurred and presents revenue and related expenses gross in the consolidated statement of operations and comprehensive loss. In the periods presented, substantially all of the revenue generated by the Company was derived from government research contracts. In the periods presented, nearly all of the revenue the Company generated was derived from research contracts with and grants from the U.S. government. As of December 31, 2013, the Company had completed all of its contracts with the DoD except for the Marburg portion of the July 2010 and 2012 agreements for the development of therapeutics against Ebola and Marburg viruses.
The following table sets forth the revenue from each of the Company’s contracts with the U.S. government and other revenue for the years ended December 31, 2013, 2012 and 2011.
| Year Ended December 31, | ||||||||||||
| 2013 | 2012 | 2011 | ||||||||||
| (in thousands) | ||||||||||||
|
July 2010 Agreement (Ebola and Marburg IV) |
$ | 9,064 | $ | 36,557 | $ | 42,875 | ||||||
|
June 2010 Agreement (H1N1) |
427 | — | 3,490 | |||||||||
|
May 2009 Agreement (H1N1) |
— | — | 516 | |||||||||
|
August 2012 Agreement (Intramuscular administration) |
2,791 | 673 | — | |||||||||
|
November 2012 SKIP-NMD Agreement (DMD) |
1,263 | — | — | |||||||||
|
July 2013 Children’s National Medical Center |
674 | — | — | |||||||||
|
Other Agreements |
— | 99 | 109 | |||||||||
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Total |
$ | 14,219 | $ | 37,329 | $ | 46,990 | ||||||
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The following is a description of contracts with the U.S. government:
July 2010 Contract (Ebola and Marburg Intravenous administration)
On July 14, 2010, the Company was awarded the DoD contract managed by the U.S. Department of Defense’s Joint Project Manager Transformational Medical Technologies (“JPM-TMT”) program for the advanced development of its hemorrhagic fever virus therapeutic candidates, AVI-6002 and AVI-6003, against the Ebola and Marburg viruses, respectively. In February 2012, the Company announced that it received permission from the FDA to proceed with a single oligomer from AVI-6003, AVI-7288, as the lead product candidate against Marburg virus infection.
On August 2, 2012, the Company received a stop-work order related to the Ebola virus portion of the contract and, on October 2, 2012, the DoD terminated the Ebola portion of the contract for the convenience of the government due to government funding constraints.
The remaining Marburg portion of the contract is structured into four segments and has an aggregate remaining period of performance spanning approximately four years if DoD exercises its options for all segments. Activities under the first segment began in July 2010 and include Phase I studies in healthy volunteers as well as preclinical studies.
After completion of the first segment, and each successive segment, DoD has the option to proceed to the next segment. If DoD exercises its options for segments II, III and IV, the Company’s contract activities would include all clinical and licensure activities necessary to obtain FDA regulatory approval for the therapeutic candidate against the Marburg virus. The funding for segments II, III and IV of the Marburg virus portion of the contract is estimated to be approximately $84.4 million.
June 2010 Agreement (H1N1/Influenza)
On June 4, 2010, the Company entered into a contract with the Defense Threat Reduction Agency (“DTRA”) to advance the development of AVI-7100 as a medical countermeasure against the pandemic H1N1 influenza virus in cooperation with the Transformational Medical Technologies program, or TMT, of the DoD. The period of performance for this contract ended on June 3, 2011. The Company recognized $0.4 million associated with this agreement in 2013, which was the result of an indirect rate adjustment.
May 2009 Agreement (H1N1/Influenza)
In May 2009, the Company entered into a contract with DTRA to develop swine flu drugs using its proprietary PMO and PMOplus® antisense chemistry. In March 2010, the contract was amended to include testing against additional influenza strains. The Company has agreed with DTRA that the key activities under this contract were completed in 2011.
August 2012 Agreement (Intramuscular administration)
On August 29, 2012, the Company was awarded a contract from the JPM-TMT program. The contract was for approximately $3.9 million to evaluate the feasibility of an intramuscular (IM) route of administration using AVI-7288, the Company’s candidate for treatment of Marburg virus. The period of performance for this contract concluded in the third quarter of 2013.
European Union SKIP-NMD Agreement (DMD)
In November 2012, the Company entered into an agreement for a collaborative research project partially funded by the EC Health Innovation. The agreement provides for approximately $2.5 million for research in certain development and study related activities for a DMD therapeutic and is expected to last approximately three years.
During the year ended December 31, 2013, the Company received $1.3 million in payments under the E.U. SKIP-NMD agreement, which were fully recognized as revenue during the year ended December 31, 2013 as all of the related work was performed.
July 2013 Children’s National Medical Center (CNMC) Agreement
In July 2013, the Company entered into an agreement totaling $1.3 million to provide drug product to CNMC to conduct research related to the Company’s DMD program. During the year ended December 31, 2013, the Company recognized $0.7 million as revenue under the agreement.