Note 5 - Revenue |
9 Months Ended |
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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 December 31, 2019 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 December 31, 2019 $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 December 31, 2019, there was no $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 2019 nil and $8,000, respectively, and in the nine months ended September 30, 2020 2019 $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 Inavirnine months ended September 30, 2020 2019 $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 2019 $535,000 and $2,116,000 in the nine months ended September 30, 2020 2019 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 2019 $165,000 and $254,000 was included in income tax expense in the nine months ended September 30, 2020 2019 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. |