10. GOVERNMENT CONTRACTS

The Company recognizes revenue from U.S. and E.U. government research contracts and other grants during the period in which the related expenditures are incurred and presents revenue and related expenses gross in the unaudited condensed consolidated statements of operations and comprehensive loss. In the periods presented, substantially all of the revenue generated by the Company was derived from government research contracts.

The following table summarizes the revenue for each of the Company’s contracts with the U.S. and E.U. governments for each of the periods indicated:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2014		2013		2014		2013
	(in thousands)
July 2010 Agreement (Ebola and Marburg IV)	$	1,043	$	2,444	$	6,816	$	7,134
August 2012 Agreement (Intramuscular)		—		514		—		2,759
European Union SKIP-NMD Agreement (DMD)		16		536		1,405		599
July 2013 Children’s National Medical Center Agreement (DMD)		—		674		659		674
Carolinas Medical Center Agreement (DMD)		—		—		850		—
Other Agreements		—		—		—		427

Total	$	1,059	$	4,168	$	9,730	$	11,593

July 2010 Agreement (Ebola and Marburg Intravenous administration)

In July 2010, the Company was awarded the DoD contract managed by its Joint Project Manager Medical Countermeasure Systems (“JPM-MCS”) program for the advanced development of its hemorrhagic fever virus therapeutic candidates, AVI-6002 and AVI-6003, against Ebola and Marburg viruses, respectively. In February 2012, the Company announced that it received permission from the FDA to proceed with a single oligomer from AVI-7288, one of the two components that make up AVI-6003, as the lead product candidate against Marburg virus infection. In August 2012, the Company received a stop-work order related to the Ebola virus portion of the contract and, in October 2012, the DoD terminated the Ebola portion of the contract for the convenience of the government due to government funding constraints.

The Marburg portion of the contract was structured into four segments and had an aggregate remaining period of performance spanning approximately four years if the DoD exercised its options for all segments. Activities under the first segment began in July 2010 and included preclinical studies and Phase I studies in healthy volunteers. In February 2014, the Company announced positive safety results from the Phase I multiple ascending dose study of AVI-7288. The remaining Marburg portion of the contract expired in July 2014. The majority of the revenue under this contract has been recognized as of September 30, 2014 and only revenue for contract finalization, if any, is expected in the future.

For the three months ended September 30, 2014 and 2013, the Company recognized $1.0 million and $2.4 million, respectively, as revenue under this agreement. For the nine months ended September 30, 2014 and 2013, the Company recognized $6.8 million and $7.1 million, respectively, as revenue under this agreement.

August 2012 Agreement (Intramuscular)

In August 2012, the Company was awarded a contract from the JPM-MCS program. The contract was for approximately $3.9 million to evaluate the feasibility of an intramuscular route of administration using AVI-7288, the Company’s candidate for treatment of the Marburg virus. The period of performance for this contract concluded in the third quarter of 2013. Accordingly, no revenue was recognized since the conclusion of the contract. For the three and nine months ended September 30, 2013, the Company recognized $0.5 million and $2.8 million, respectively, as revenue under this agreement.

European Union SKIP-NMD Agreement (DMD)

In November 2012, the Company entered into an agreement for a collaborative research project partially funded by the E.U. Health Innovation. The agreement provides for approximately $2.5 million for research in certain development and study related activities for a DMD therapeutic. For the three months ended September 30, 2014 and 2013, the Company recognized less than $0.1 million and slightly more than $0.5 million, respectively, as revenue under this agreement. For the nine months ended September 30, 2014 and 2013, the Company recognized $1.4 million and $0.6 million, respectively, as revenue under this agreement. The majority of the revenue under this contract has been recognized as of September 30, 2014 and only revenue for contract finalization, if any, is expected in the future.

July 2013 Children’s National Medical Center (“CNMC”) Agreement (DMD)

In July 2013, the Company entered into an agreement totaling $1.3 million to provide drug products to CNMC to conduct research related to one of the Company’s DMD programs. For the three months ended September 30, 2014 and 2013, $0 and $0.7 million was recognized as revenue under this agreement, respectively. For each of the nine months ended September 30, 2014 and 2013, $0.7 million was recognized as revenue under this agreement. Revenue under this agreement was fully recognized as of March 31, 2014.

Carolinas Medical Center (“CMC”) Agreement (DMD)

The Company entered into a collaboration agreement with CMC to co-develop one of the Company’s DMD programs. Under the agreement, CMC was obligated to reimburse certain preclinical costs incurred by the Company. All preclinical work was completed and the Company recognized revenue of $0 and $0.9 million for the three and nine months ended September 30, 2014, respectively.