License and Research Collaboration Agreements

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

License and Research Collaboration Agreement

License and Research Collaboration Agreement

Merck Sharp & Dohme Corp.

In November 2014, NewLink entered into a licensing and collaboration agreement (the "NewLink Merck Agreement") with Merck to develop, manufacture and commercialize rVSV-ZEBOV-GP, an Ebola vaccine that NewLink licensed from the Public Health Agency of Canada ("PHAC"). Under the terms of the NewLink Merck Agreement, NewLink granted Merck an exclusive, royalty bearing license to rVSV-ZEBOV-GP and related technology. Under the NewLink Merck Agreement, NewLink received a $30.0 million non-refundable, upfront payment in December 2014, and a one-time $20.0 million non-refundable milestone payment in February 2015 upon the initiation of the pivotal clinical trial using the current rVSV-ZEBOV-GP vaccine product as one arm of the trial.

The NewLink Merck Agreement was amended on December 5, 2017 in connection with our entry into an amended and restated PHAC license on December 5, 2017. The amended NewLink Merck Agreement absolves our subsidiary, BioProtection Systems Corporation ("BPS"), from any future obligation to negotiate or amend the terms of the PHAC license, converts the scope of Merck's sublicense under PHAC’s intellectual property rights to be non-exclusive in the Ebola Sudan field of use, and requires Merck to reimburse us in certain circumstances where we may be obligated to pay royalties to PHAC as a result of Merck’s product sales but Merck would not otherwise be obligated to pay a royalty to us. On April 26, 2018, NewLink entered into an agreement with Merck, the U.S. BioMedical Advanced Research and Development Authority ("BARDA"), and the Defense Threat Reduction Agency ("DTRA") to transfer the government grants from BARDA and DTRA to Merck. The transfer was completed in June 2018 and Merck replaced NewLink as the prime contractor on all such grants.

On December 20, 2019, Merck announced that the FDA approved its application for ERVEBO® (Ebola Zaire Vaccine, Live) for the prevention of disease caused by Zaire Ebola virus in individuals 18 years of age and older. On January 3, 2020, Merck notified NewLink that they had been issued a PRV. Under the terms of the NewLink Merck Agreement, on February 4, 2020, Merck assigned all of its rights and interests in connection with the PRV to NewLink. Upon the Merger, the Company is entitled to 60% of the value of the PRV obtained through sale, transfer or other disposition of the PRV. The Company also has the potential to earn royalties on sales of the vaccine in certain countries, if the vaccine is successfully commercialized by Merck. However, we believe that the market for the vaccine will be limited primarily to areas in the developing world that are excluded from royalty payment or where the vaccine is donated or sold at low or no margin and therefore we do not expect to receive material royalty payments from Merck in the foreseeable future.

For the three months ended March 31, 2020, the Company recognized revenues under the amended NewLink Merck Agreement of $21,000, for work the Company performed as a subcontractor of Merck under the government contracts that were transferred to Merck.