(6)	Licenses, Royalty Collaborative and Contractual Arrangements

Royalty agreements

The Company entered into a worldwide royalty-bearing research and license agreement with GlaxoSmithKline (“GSK”) in 1990 for the development and commercialization of zanamivir, a neuraminidase inhibitor (“NI”) marketed by GSK as Relenza® to treat influenza. Under the terms of the agreement, the Company licensed zanamivir to GSK on an exclusive basis and is entitled to receive a royalty of 7% of GSK's annual net sales of Relenza

in the U.S., Europe, Japan and certain other countries as well as 10% of GSK's annual net sales of Relenza® in Australia, New Zealand, South Africa and Indonesia. The Relenza

patent portfolio is scheduled to expire as follows: December 2014 in the U.S., May 2015 in Australia and the major countries of the European Union (“EU”), and July 2019 in Japan. On August 25, 2014, GSK filed an appeal to the United States Patent Trial Appeal Board in relation to U.S. Patent Application No. 08/737,141. GSK has verified that the Company will continue to receive royalties on the net sales of Relenza

in the United States beyond December 2014 to the extent that this patent application remains pending or is ultimately issued. On March 19, 2015, the Company reported that the United States Patent Trial and Appeal Board had issued a decision denying the appeal and affirming the Examiner’s prima facie case of obviousness rejection under 35 United States Code (“U.S.C.”) 103(a). On May 7, 2015, the Company reported that it has filed a request with the United States Patent Trial and Appeal Board for a rehearing in relation to this pending patent application. The Company is unable at this time to determine the duration or the outcome of this appeal process, or how long this patent application will remain pending.

The Company also generates royalty revenue from the sale of laninamivir octanoate, which Daiichi Sankyo markets as Inavir

in Japan pursuant to a commercialization agreement that the Company entered into with Daiichi Sankyo in 2009. In September 2010, laninamivir octanoate (Inavir

) was approved for sale by the Japanese Ministry of Health and Welfare for the treatment of influenza in adults and children. In December 2013, Inavir

was also approved in Japan for the prevention of influenza in adults and children. Under the agreement, the Company currently receives a 4% royalty on net sales of Inavir

in Japan and is eligible to earn additional sales milestone payments. Under the a collaboration and license agreement entered into in 2003, the Company and Daiichi Sankyo have cross-licensed the world-wide rights to develop and commercialize the related intellectual property, and have agreed to share equally in any royalties, license fees, or milestone or other payments received from any third party licenses outside of Japan. Patents on laninamivir octanoate in Japan generally expire in 2024.

Collaborative and contract arrangements

In March 2011, the Company’s wholly owned subsidiary, Biota Scientific Management Pty Ltd., was awarded a contract by BARDA for the development of laninamivir octanoate on a cost-plus-fixed-fee basis, the total of which was not to exceed $231.2 million. BARDA is part of the U.S. Office of the ASPR within the HHS. The BARDA contract was designed to fund and provide the Company with all technical and clinical data and U.S. based manufacturing to support the filing of a NDA with the FDA for laninamivir octanoate. The performance period of the BARDA contract commenced on March 31, 2011, and was intended to continue for five years. On May 7, 2014 HHS/ASPR/BARDA notified the Company of its decision to terminate the contract for the convenience of the U.S. Government. The Company has been and continues to work with ASPR/BARDA to close out this contract, which at this time involves negotiating a final equitable termination settlement.

The Company was considered an active participant in the BARDA contract, with exposure to significant risks and rewards of commercialization relating to the development of laninamivir octanoate. Therefore, revenues from and costs associated with the close out of the contract are recorded and recognized on a gross basis in the consolidated statement of operations.

Biota Pharmaceuticals, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(for the quarterly period ended March 31, 2015)

The following tables summarize the key components of the Company’s revenues (in millions):

	Three Months Ended March 31,
	2015		2014
	(in millions)
Royalty revenue – Relenza ®	$	3.0	$	4.2
– Inavir ®		2.5		3.9
Revenue from services		0.4		21.4
Milestones and other revenue		-		-
Total revenue	$	5.9	$	29.5

	Nine Months Ended March 31,
	2015		2014
	(in millions)
Royalty revenue – Relenza ®	$	7.3	$	9.7
– Inavir ®		4.8		4.4
Revenue from services		8.4		46.1
Milestones and other revenue		-		0.1
Total revenue	$	20.5	$	60.3