Revenue Recognition

6 Months Ended

Jun. 30, 2013

3.	Revenue Recognition

The Company recognizes revenue from all sources based on the provisions of the SEC's Staff Accounting Bulletin (SAB) No. 104 (SAB 104) and ASC 605 Revenue Recognition. Under ASC 605, delivered items are separate units of accounting, provided (i) the delivered items have value to a collaborator on a stand-alone basis, and (ii) if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered items is considered probable and substantially in our control. A separate update to ASC 605 provides guidance on the criteria that should be met when determining whether the milestone method of revenue recognition is appropriate.

There have been no changes as of and for the six months ended June 30, 2013 to our revenue recognition accounting policies disclosed in Note 2 to the consolidated financial statements included in our 2012 Annual Report on Form 10-K.

Under our 2012 agreement with CytoDyn Inc. for our PRO 140 program, and a Molecular out-license of rights to its Onalta™ product candidate, we received a total of $3.7 million ($3.5 million in October 2012 and $0.2 million in March 2013) in upfront payments and are eligible for future milestone and royalty payments. In consideration for the upfront payments, we are responsible for delivering relevant know-how (including patent rights), inventory and non-reimbursable services. In respect of these deliverables, which have a stand-alone value and represent separate units of accounting, we recognized $2,827 of revenue in 2012 and $862 in 2013.

Under our Relistor license agreement with Salix, we have recognized $82 and $102 during the first six months of 2013 and 2012, respectively, from the $60.0 million upfront payment. We expect to recognize the remaining $80 deferred revenue – current as we complete joint committee services in the future.

- Definition

Disclosure of accounting policy for revenue recognition. If the entity has different policies for different types of revenue transactions, the policy for each material type of transaction is generally disclosed. If a sales transaction has multiple element arrangements (for example, delivery of multiple products, services or the rights to use assets) the disclosure may indicate the accounting policy for each unit of accounting as well as how units of accounting are determined and valued. The disclosure may encompass important judgment as to appropriateness of principles related to recognition of revenue. The disclosure also may indicate the entity's treatment of any unearned or deferred revenue that arises from the transaction.

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