COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENTS

12 Months Ended

Dec. 31, 2016

COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENTS [Abstract]

COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENTS

NOTE 14 — COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENTS:

In 2016, 2015, and 2014 the Company earned $3.7 million, $2.3 million, and $1.7 million, respectively, from research revenues and milestones. The Company is now involved in additional feasibility and development contracts related to its DPP® technology. The total expended on R&D, excluding regulatory, in 2016, 2015, and 2014, was approximately $6.9 million, $5.4 million, and $4.1 million, respectively.

a. RVR DPP® technology transfer agreement:

In February 2014, the Company entered into a technology transfer agreement with RVR Diagnostics for $1,500,000. The agreement was modified in September 2014 and September 2015. Per the agreement, as modified, the Company earned $-, $125,000 and $1,125,000 in milestone payments during 2016, 2015 and 2014. The Company has earned $1,250,000 from this grant from inception through December 31, 2016. See subsequent event note describing the Company's acquistion of RVR Diagnostics in January 2017.

b. Dengue agreement:

In October 2014, the Company entered into a development agreement with an international diagnostics company for $300,000. Revenue for this agreement is being recognized under a proportional performance method. For the years ended December 31, 2016, 2015 and 2014, the Company earned $-, $240,000 and $60,000, respectively from this grant. The Company has earned $300,000 from this grant from inception through December 31, 2016.

Brain Injury agreement:

In January 2015, the Company entered into a technology development agreement with Perseus Science Group LLC for $946,000 and a follow-on agreement in December 2016 for $350,000. Revenue for this agreement is being recognized under a proportional performance method. The Company earned $297,000 and $469,600 for the year ended December 31, 2016 and 2015, respectively from this agreement. The Company has earned $766,600 from this grant from inception through December 31, 2016.

Malaria agreement:

In January 2015, the Company was awarded a grant from The Bill & Melinda Gates Foundation for $307,000. Revenue for this agreement is being recognized under a proportional performance method. The Company earned $- and $307,000 for the year ended December 31, 2016 and 2015, respectively from this agreement. The Company has earned $307,000 from this grant from inception through December 31, 2016.

In April 2016, the Company was awarded a grant from the Bill & Melinda Gates Foundation for $677,944. The Company earned $518,761 for the year ended December 31, 2016 from this agreement, which is the total amount earned from this grant from inception through December 31, 2016.

Cancer agreement:

In October 2014, the Company entered into a technology development agreement with an international diagnostics company for $320,000. Revenue for this agreement is being recognized under a proportional performance method. For the years ended December 31, 2016, 2015 and 2014, the Company earned $65,000, $205,000 and $-, respectively from this grant. The Company has earned $270,000 from this grant from inception through December 31, 2016.

Fever panel agreement:

In October 2015, the Company entered into an agreement with Paul G. Allen Ebola Program for $2,118,265 and a follow-on agreement in February 2016 for $550,000. Revenue for this agreement is being recognized under a proportional performance method. The Company earned $2,259,800 and $408,500 for the year ended December 31, 2016 and 2015, respectively from this agreement. The Company has earned $2,668,265 from this grant from inception through December 31, 2016.

g. BARDA Zika agreement:

In August 2016, the Company was awarded a grant for $5,933,742 from BARDA, which is part of the U.S. Department of Health And Human Resources. The Company earned $472,700 for the year ended December 31, 2016 from this agreement. The Company earned $472,700 from this grant from inception through December 31, 2016.

USDA Bovid:

In September 2016, the Company entered into an agreement with the USDA for $669,423 to develop a Bovid TB assay. Revenue for this agreement is being recognized under a proportional performance method. The Company earned $121,500 for the year ended December 31, 2016 from this agreement.

Governmental Regulation:

All of the Company's existing and proposed diagnostic products are regulated by the United States Food and Drug Administration (FDA), United States Department of Agriculture, certain state and local agencies, and/or comparable regulatory bodies in other countries. Most aspects of development, production, and marketing, including product testing, authorizations to market, labeling, promotion, manufacturing, and record keeping are subject to review. After marketing approval has been granted, Chembio must continue to comply with governmental regulations. Failure to comply with these regulations can result in significant penalties.

- Definition

The entire disclosure for research, development, and computer software activities, including contracts and arrangements to be performed for others and with federal government. Includes costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility and in-process research and development acquired in a business combination consummated during the period.

+ References + Details