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Collaboration Agreements
12 Months Ended
Dec. 31, 2017
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Collaboration Agreements

Note 3: Collaboration Agreements

Reneo License Agreement

On December 21, 2017, the Company entered into a License Agreement with Reneo Pharmaceuticals, Inc. (“Reneo”) (the “Reneo License Agreement”), under which Reneo obtained an exclusive, worldwide, sublicensable license to develop and commercialize the Company’s peroxisome proliferation activated receptor delta (PPAR-δ) agonist program, including the compound HPP593, for therapeutic, prophylactic or diagnostic application in humans.  Under the terms of the Reneo License Agreement, Reneo paid the Company an upfront cash payment of $3.0 million. The Company is eligible to receive additional potential development, regulatory and sales-based milestone payments totaling up to $94.5 million.  In addition, Reneo is obligated to pay the Company royalty payments at mid-single to low-double digit rates, based on tiers of annual net sales of licensed products.  Such royalties will be payable on a licensed product-by-licensed product and country-by-country basis until the latest of expiration of the licensed patents covering a licensed product in a country, expiration of data exclusivity rights for a licensed product in a country or a specified number of years after the first commercial sale of a licensed product in a country.  As additional consideration, the Company has also received common stock and certain participation rights representing a minority equity interest in Reneo.

Pursuant to the terms of the Reneo License Agreement, the Company is required to provide technology transfer services for a defined period after the effective date.  In accordance with ASC 605-25, the Company identified all of the obligations at the inception of the Reneo License Agreement.  The significant obligations were determined to be the license and the technology transfer services.  The Company has determined that the license and technology transfer services represent a single unit of accounting because they were not viewed to have standalone value.   The Company also determined that there was no discernable pattern in which the technology services would be provided during the transfer services period.  As such, the Company determined that the straight-line method would be used to recognize revenue over the transfer service period of 18 months and $0.1 million of revenue was recorded during the year ended December 31, 2017.

The development, regulatory and sales milestones represent non-refundable amounts that would be paid by Reneo to the Company if certain milestones are achieved in the future.  The Company has elected to apply the guidance in ASC 605-28 to these milestones. These milestones, if achieved, are considered substantive as they relate solely to past performance and are commensurate with estimated enhancement of value associated with the achievement of each milestone as a result of the Company’s performance.  However, there can be no assurance that Reneo will achieve the milestones or that the Company will receive the related revenue.  

Huadong License Agreement

On December 21, 2017, the Company entered into a License Agreement with Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. (“Huadong”) (the “Huadong License Agreement”), under which Huadong obtained an exclusive and sublicensable license to develop and commercialize the Company’s glucagon-like peptide-1 receptor agonist (“GLP-1r”) program, including the compound TTP273, for therapeutic uses in humans or animals, in China and certain other Pacific Rim countries, including Australia and South Korea (collectively, the “Huadong License Territory”).  Additionally, under the Huadong License Agreement, the Company obtained a non-exclusive, sublicensable, royalty-free license to develop and commercialize certain Huadong patent rights and know-how related to the Company’s GLP-1r program for therapeutic uses in humans or animals outside of the Huadong License Territory.  Under the terms of the Huadong License Agreement, Huadong will pay the Company an initial license fee of $8.0 million and potential development and regulatory milestone payments totaling up to $25.0 million, with an additional potential regulatory milestone of $20.0 million if Huadong receives regulatory approval for a central nervous system indication.  In addition, the Company is eligible for an additional $50.0 million in potential sales-based milestones, as well as royalty payments ranging from low-single to low-double digit rates, based on tiered sales of licensed products.  

Under the Huadong License Agreement, the Company is also responsible for conducting a Phase 2 multi-region clinical trial (the “Phase 2 MRCT”) including sites in both the United States and Huadong License Territory for the purpose of assessing the safety and efficacy of TTP273 in patients with type 2 diabetes.  The Phase 2 MRCT will be designed to satisfy the requirements of the China Food and Drug Administration necessary in order for Huadong to begin a Phase 3 clinical trial in China.  The Company will also be responsible for contributing up to $3.0 million in connection with the Phase 2 MRCT

In accordance with ASC 605-25, the Company identified all of the obligations at the inception of the Huadong License Agreement.  The significant obligations were determined to be (i) the exclusive license to develop and commercialize the Company’s GLP-1r program, (ii) technology transfer services related to the chemistry and manufacturing know-how for a defined period after the effective date (iii) the obligation to sponsor and conduct the Phase 2 MRCT, (iv) the Company’s obligation to participate on a joint development committee, and (v) other obligations considered to be de minimis in nature.  

The Company has determined that the license and technology transfer services related to the chemistry and manufacturing know-how represent a combined unit of accounting because they were not viewed to have separate standalone value.   The portion of the upfront payment allocated to this combined unit of accounting was estimated to be $6.9 million.  The Company also determined that there was no discernable pattern in which the technology transfer services would be provided during the transfer service period.  As such, the Company determined that the straight-line method would be used to recognize revenue for this unit of accounting over the transfer service period of 18 months.  For the year ended December 31, 2017, $0.1 million of revenue has been recognized related to this combined unit of accounting.

The Company also determined that the obligation to sponsor and conduct a portion of the Phase 2 MRCT should be treated as a separate unit of accounting.  A portion of the total consideration received under the Huadong License Agreement was allocated to this unit of accounting based on its estimated fair value.  This amount was deferred as of December 31, 2017 and revenue will be recognized using the proportional performance model over the period during which the Company conducts the Phase 2 MRCT trial.  No revenue for this unit of accounting has been recognized during the year ended December 31, 2017.

The Company also determined that the obligation to participate in the joint development committee (the “JDC”) to oversee the development of products and the Phase 2 MRCT in accordance with the development plan should be treated as a separate unit of accounting.  A portion of the total consideration received under the Huadong License Agreement was allocated to this unit of accounting based on its estimated fair value.  This amount was deferred as of December 31, 2017 and revenue will be recognized using the proportional performance model over the period of the Company’s participation on the JDC. No revenue for this unit of accounting has been recognized during the year ended December 31, 2017.

The development, regulatory and sales milestones represent non-refundable amounts that would be paid by Huadong to the Company if certain milestones are achieved in the future.  The Company has elected to apply the guidance in ASC 605-28 to these milestones. These milestones, if achieved are substantive as they relate solely to past performance and are commensurate with estimated enhancement of value associated with the achievement of each milestone as a result of the Company’s performance.  However, there can be no assurance that Huadong will achieve the milestones or that the Company will receive the related payments.

JDRF Agreement

In August 2017, the Company entered into the JDRF Agreement to support the funding of the simplici-T1 Study, an adaptive Phase 1b/2 study to explore the effects of TTP399 in type 1 diabetics.  We initiated this study in the fourth quarter of 2017.  According to the terms of the JDRF Agreement, JDRF will provide research funding of up to $3.0 million based on the achievement of research and development milestones, with the total funding provided by JDRF not to exceed approximately one-half of the total cost of the project.  Additionally, the Company has the obligation to make certain milestone payments to JDRF upon the commercialization, licensing, sale or transfer of TTP399 as a treatment for type 1 diabetes.

Payments that the Company receives from JDRF under this agreement will be recorded as restricted cash and current liabilities, and recognized as an offset to research and development expense, based on the progress of the project, and only to the extent that the restricted cash is utilized to fund such development activities.  As of December 31, 2017, the Company had received funding under this agreement of $0.3 million, and research and development costs were offset by $0.2 million.  As of December 31, 2017, the Company has recognized restricted cash of $0.2 million related to this agreement.

Calithera License Agreement

In March 2015, the Company entered into the Calithera License Agreement under which Calithera obtained an exclusive, worldwide sublicenseable license to develop and commercialize certain of our hexokinase II inhibitors for any therapeutic, prophylactic, preventative or diagnostic use.  Under the terms of the Calithera License Agreement, Calithera paid the Company an initial license fee of $0.6 million and a total of $0.3 million for employees of the Company to assist with the development of additional hexokinase inhibitors.  This agreement was terminated, at the option of Calithera, effective December 21, 2017.