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Note 5 - Revenue
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Revenue [Text Block]
NOTE 
5
.  
Revenue
 
Service Contracts with Customers
 
Contract Balances.
 Accounts receivable related to service contracts with customers as of 
September 30, 2020
and
December 31, 2019
, was
nil
and
$181,000,
respectively. Contract assets, representing unbilled receivables where revenue has been recognized in advance of customer billings, as of 
September 30, 2020
and
December 31, 2019
, was
$214,000
and
$21,000,
respectively, which is included in prepaid expenses and other current assets.
 
Remaining Performance Obligations.
 Remaining Performance Obligations (“RPO”) comprise deferred revenue plus unbilled contract revenue. As of 
September 30, 2020
and
December 31, 2019,
there was
no
deferred revenue and the aggregate amount of RPO was
$18,000
and
$211,000,
respectively, all of which was unbilled contract revenue which is
not
recorded on the balance sheet. We expect, subject to stay-at-home restrictions, that
100%
of this amount will be recognized as revenue within the next 
three
months. Unbilled contract revenue represents non-cancelable contracts under which the Company has an obligation to perform, for which revenue has
not
yet been recognized in the financial statements and the fixed amounts billable have
not
yet been invoiced.
 
Royalty Agreements
 
Aviragen entered into a royalty-generating research and license agreement with GlaxoSmithKline, plc (“GSK”) in
1990
for the development and commercialization of zanamivir, a neuraminidase inhibitor marketed by GSK as Relenza, to treat influenza. Under the agreement, all Relenza patents owned by the Company were exclusively licensed to GSK. All of the Company's Relenza patents have expired, with the last remaining patent expiring in
July 2019
in Japan, at which time royalty revenue ceased, although until
April 30, 2020,
it remained subject to adjustments for sales returns and exchange rate differences. The royalty revenue related to Relenza recognized in the
three
months ended
September 30,
 
2020
and
2019
, was
nil
and
$8,000,
respectively, and in the
nine
months ended
September 30,
 
2020
and
2019
, was
$193,000
and
$772,000,
respectively, representing
7%
of net sales in Japan.
 
The Company also generates royalty revenue from the sale of Inavir in Japan, pursuant to a collaboration and license agreement that Aviragen entered into with Daiichi Sankyo Company, Limited (“Daiichi Sankyo”) in
2009.
In
September 2010,
laninamivir octanoate was approved for sale by the Japanese Ministry of Health and Welfare for the treatment of influenza in adults and children, which Daiichi Sankyo markets as Inavir. Under the agreement, the Company currently receives a
4%
royalty on net sales of Inavir in Japan. The last patent related to Inavir is set to expire in
December 2029,
at which time royalty revenue will cease. The royalty revenue related to Inavir
recognized in the
nine
months ended
September 30,
 
2020
and
2019
, was
$2,769,000
and
$2,964,000,
respectively, representing
4%
of net sales in Japan. In addition, the Company recognized non-cash royalty revenue related to the sale of future royalties (see Note
6
) of
$263,000
and
$352,000
in the 
three
months ended
September 30,
 
2020
and
2019
, respectively, and
$535,000
and
$2,116,000
in the 
nine
months ended
September 30,
 
2020
and
2019
, respectively. Both the royalty revenue and the non-cash royalty revenue related to sale of future royalties have been subjected to a
5%
withholding tax in Japan, for which
$13,000
and
$17,000
was included in income tax expense in the 
three
months ended
September 30,
 
2020
and
2019
, respectively, and
$165,000
and
$254,000
was included in income tax expense in the 
nine
months ended
September 30,
 
2020
and
2019
, respectively.
 
The Company's royalty revenue is seasonal, in line with the flu season, so the majority of the Company's royalty revenue is earned in the
first
and
fourth
fiscal quarters.