Strategic Agreements | 12 Months Ended |
Dec. 31, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Strategic Agreements | 2. Strategic Agreements |
The collaborative research and development and other revenues associated with the Company’s major third-party collaborators are as follows (in thousands): |
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| | Year ended December 31, | |
| | 2014 | | | 2013 | | | 2012 | |
Collaborator | | | | | | | | | | | | |
Zogenix, Inc. (Zogenix) (1) | | $ | 4,431 | | | $ | 918 | | | $ | 1,872 | |
Impax Laboratories, Inc. (Impax) (2) | | | 2,106 | | | | — | | | | — | |
Pain Therapeutics, Inc. (Pain Therapeutics) | | | 1,359 | | | | 750 | | | | 750 | |
Pfizer Inc. (Pfizer) (3) | | | 118 | | | | 42 | | | | 11,721 | |
Santen Pharmaceutical Co. Ltd. (Santen) (4) | | | 16 | | | | — | | | | — | |
Hospira, Inc. (Hospira) (5) | | | — | | | | — | | | | 23,726 | |
Nycomed Danmark ApS (Nycomed) (6) | | | — | | | | — | | | | 3,705 | |
Others | | | 226 | | | | 1,880 | | | | 720 | |
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Total collaborative research and development and other revenue | | $ | 8,256 | | | $ | 3,590 | | | $ | 42,494 | |
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-1 | Amounts related to ratable recognition of upfront fees were $255,000 in 2014, $241,000 in 2013 and $312,000 in 2012. | | | | | | | | | | | |
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-2 | Amounts related to recognition of upfront fees were $2.0 million in 2014 and zero in 2013 and 2012, respectively; the Company and Impax signed a license agreement effective January 3, 2014. | | | | | | | | | | | |
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-3 | Amounts related to ratable recognition of upfront fees were zero in 2014 and 2013, and $9.9 million in 2012. In February 2011, Pfizer acquired King and thereby assumed the rights and obligations of King under the agreements the Company formerly had in place with King; accordingly amounts formally attributed to King are shown as Pfizer figures. In February 2012, the Company was notified that Pfizer was terminating the worldwide Development and License Agreement between Alpharma (acquired by King which subsequently was acquired by Pfizer) and the Company dated September 19, 2008 relating to the development and commercialization of ELADUR. As a result, the Company recognized as revenue all of the remaining upfront fees in 2012 that had previously been deferred. | | | | | | | | | | | |
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-4 | Amounts related to recognition of upfront fees were $15,000 in 2014 and zero in 2013 and 2012, respectively; the Company and Santen signed a license agreement effective December 11, 2014. | | | | | | | | | | | |
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-5 | Amounts related to ratable recognition of upfront fees were zero in both 2014 and 2013, and $21.8 million in 2012. In March 2012, the Company was notified that Hospira was terminating the Development and License Agreement between Hospira and the Company dated June 1, 2010 relating to the development and commercialization of POSIDUR in the United States and Canada. As a result, the Company recognized as revenue all of the remaining upfront fees in 2012 that had previously been deferred. | | | | | | | | | | | |
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-6 | Amounts related to ratable recognition of upfront fees were zero in both 2014 and 2013, and $3.7 million in 2012. Takeda Pharmaceutical Company Limited acquired Nycomed and thereby assumed the rights and obligations of Nycomed under the agreements the Company formerly had in place with Nycomed. In January 2012, the Company was notified that Nycomed was terminating the Development and License Agreement between Nycomed and the Company dated November 26, 2006, as amended, relating to the development and commercialization of POSIDUR in Europe and their other licensed territories. As a result, the Company recognized as revenue all of the remaining upfront fees in 2012 that had previously been deferred. | | | | | | | | | | | |
As of February 18, 2015, the Company had potential milestones of up to $243.5 million that the Company may receive in the future under its collaborative arrangements, of which $75.5 million are development-based milestones and $168.0 million are sales-based milestones. Within the category of development-based milestones, $5.0 million are related to early stage clinical testing (defined as Phase 1 or 2 activities), $12.3 million are related to late stage clinical testing (defined as Phase 3 activities), $20.2 million are related to regulatory filings, and $38.0 million are related to regulatory approvals. No payments were received between December 31, 2014 and February 18, 2015. |
Agreement with Pain Therapeutics, Inc. |
In December 2002, the Company entered into an exclusive agreement with Pain Therapeutics, Inc. (“Pain Therapeutics”) to develop and commercialize on a worldwide basis REMOXY and other oral sustained release, abuse deterrent opioid products incorporating four specified opioid drugs, using the ORADUR technology. The agreement also provides Pain Therapeutics with the exclusive right to commercialize products developed under the agreement on a worldwide basis. In connection with the execution of the agreement, Pain Therapeutics paid the Company upfront fees of $900,000 in December 2002 and $100,000 in October 2003. In December 2005, the Company amended its agreement with Pain Therapeutics in order to specify its obligations with respect to the supply of key excipients for use in the licensed products. Under the agreement, as amended, the Company is responsible for formulation development, supply of selected key excipients used in the manufacture of licensed products and other specified tasks. In 2015, Pain Therapeutics informed the Company that they intend to return to the Company all of Pain Therapeutics’ rights and obligations under the Company’s license agreement to develop and commercialize ORADUR-based formulations of oxymorphone and hydrocodone but without impacting the rights and obligations of the two parties with respect to REMOXY and hydromorphone. Under the agreement with Pain Therapeutics, subject to and upon the achievement of predetermined development and regulatory milestones for the two drug candidates, the Company is entitled to receive milestone payments of up to $5.1 million in the aggregate. As of December 31, 2014, the Company had received $1.7 million in cumulative milestone payments. In addition, if commercialized, the Company will receive royalties for REMOXY and other licensed products which do not contain an opioid antagonist of between 6.0% to 11.5% of net sales of the product depending on sales volume. This agreement can be terminated by either party for material breach by the other party and by Pain Therapeutics without cause. Under the agreement, Pain Therapeutics reimburses the Company for qualified expenses incurred by the Company in connection with the development program. |
The Company recognizes collaborative research and development revenue related to research and development activities for REMOXY and other development programs based on reimbursement of qualified expenses as defined in the collaborative agreement and related amendment with Pain Therapeutics. Total collaborative research and development revenue recognized under the agreements with Pain Therapeutics was $1.4 million in 2014, and $750,000 in 2013 and 2012. The cumulative aggregate payments received by the Company as of December 31, 2014 were $37.7 million under this agreement. |
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Under the terms of this agreement, Pain Therapeutics paid the Company an upfront license fee of $1.0 million, with the potential for an additional $5.1 million in performance milestone payments based on the successful development and approval of the two ORADUR-based opioids. Of these potential milestones, $5.1 million are all development-based milestones. As of December 31, 2014, the Company had received $1.7 million in cumulative milestone payments. There are no sales-based milestones under the agreement. |
In March 2009, King assumed the responsibility for further development of REMOXY from Pain Therapeutics. As a result of this change, the Company continued to perform REMOXY-related activities in accordance with the terms and conditions set forth in the license agreement between the Company and Pain Therapeutics. King was essentially substituted in lieu of Pain Therapeutics with respect to interactions with the Company in its performance of those activities including the obligation to pay the Company with respect to all REMOXY-related costs incurred by the Company. In February 2011, Pfizer acquired King and thereby assumed the rights and obligations of King with respect to REMOXY; accordingly, amounts formally attributed to King are shown as Pfizer figures. In October 2014, Pfizer notified Pain Therapeutics that Pfizer has decided to discontinue development of REMOXY, and that Pfizer would return all rights, including responsibility for regulatory activities, to Pain Therapeutics and that Pfizer will continue ongoing activities under the agreement until the scheduled termination date in April 2015. |
Total collaborative research and development revenue recognized for REMOXY-related work performed by the Company for Pfizer was $118,000, $42,000 and $1.7 million for the years ended December 31, 2014, 2013 and 2012, respectively. Prior to March 2009, the Company recognized collaborative research and development revenue for REMOXY-related work under the agreements with Pain Therapeutics. The cumulative aggregate payments received by the Company from Pfizer as of December 31, 2014 were $7.1 million under this agreement. |
Long Term Supply Agreement with King (now Pfizer) |
During 2008, the Company began to manufacture commercial lots of certain key excipients that are included in REMOXY to meet the anticipated requirements for these components. |
In August 2009, the Company signed an exclusive long term excipient supply agreement with respect to REMOXY with King. In February 2011, Pfizer acquired King and thereby assumed the rights and obligations of King with respect to this long term supply agreement. This agreement stipulates the terms and conditions under which the Company will supply to King, based on the Company’s manufacturing cost plus a specified percentage mark-up, two key excipients used in the manufacture of REMOXY. |
The term of the agreement commenced on August 5, 2009 and will continue in effect until the earlier of the expiration of all licenses granted under the development and license agreement between the Company and Pain Therapeutics or the termination or expiration of the 2005 development and license agreement between Pain Therapeutics and King, unless the agreement is terminated earlier in accordance with its terms. The agreement provides each party with specified termination rights, which include, but are not limited to, the right of King to terminate the agreement in the event that governmental action requires the withdrawal of REMOXY from all countries in the territory or results in the withdrawal of required manufacturing approvals, or upon a change of control of the Company, in which case termination will be effective one year after notice by King. The Company may terminate the agreement if the Company is unable to procure suitable and sufficient quantities of certain raw materials required to produce the excipient ingredients. Each party may terminate the agreement upon material breach of the agreement by, or the bankruptcy or insolvency of, the other party, in each case subject to a cure period. The agreement further specifies the rights and obligations of the Company and King with respect to plant allocation, adding additional production capacity and sourcing of raw materials, as well as other terms and conditions customary for this type of agreement, including those regarding forecasting, purchasing, invoicing, representations, warranties and indemnities. |
In 2014, 2013 and 2012, the Company recognized $33,000, $273,000 and $48,000 of product revenue, respectively, related to key excipients for REMOXY and the associated cost of goods sold was zero, $165,000 and $33,000, respectively. |
Agreement with Zogenix, Inc. |
On July 11, 2011, the Company and Zogenix, Inc., (Zogenix), entered into a Development and License Agreement (the Zogenix Agreement). The Company and Zogenix had previously been working together under a feasibility agreement pursuant to which the Company’s research and development costs were reimbursed by Zogenix. Under the Zogenix Agreement, Zogenix will be responsible for the clinical development and commercialization of a proprietary, long-acting injectable formulation of risperidone using the Company’s SABER controlled-release formulation technology potentially in combination with Zogenix’s DosePro® needle-free, subcutaneous drug delivery system. DURECT will be responsible for non-clinical, formulation and CMC development activities. The Company will be reimbursed by Zogenix for its research and development efforts on the product. |
Zogenix paid a non-refundable upfront fee to the Company of $2.25 million in July 2011. The Company’s research and development services are considered integral to utilizing the licensed intellectual property and, accordingly, the deliverables are accounted for as a single unit of accounting. The $2.25 million upfront fee will be recognized as collaborative research and development revenue ratably over the term of the Company’s continuing research and development involvement with Zogenix with respect to this product candidate. Zogenix is obligated to pay the Company up to $103 million in total future milestone payments with respect to the product subject to and upon the achievement of various developments, regulatory and sales milestones. Of these potential milestones, $28 million are development-based milestones (none of which has been achieved as of December 31, 2014), and $75 million are sales-based milestones (none of which has been achieved as of December 31, 2014). Zogenix is also required to pay a mid single-digit to low double-digit percentage patent royalty on annual net sales of the product determined on a jurisdiction-by-jurisdiction basis. The patent royalty term is equal to the later of the expiration of all DURECT technology patents or joint patent rights in a particular jurisdiction, the expiration of marketing exclusivity rights in such jurisdiction, or 15 years from first commercial sale in such jurisdiction. After the patent royalty term, Zogenix will continue to pay royalties on annual net sales of the product at a reduced rate for so long as Zogenix continues to sell the product in the jurisdiction. Zogenix is also required to pay to the Company a tiered percentage of fees received in connection with any sublicense of the licensed rights. |
The Company granted to Zogenix an exclusive worldwide license, with sub-license rights, to the Company’s intellectual property rights related to the Company’s proprietary polymeric and non-polymeric controlled-release formulation technology to make and have made, use, offer for sale, sell and import risperidone products, where risperidone is the sole active agent, for administration by injection in the treatment of schizophrenia, bipolar disorder or other psychiatric related disorders in humans. The Company retains the right to supply Zogenix’s Phase 3 clinical trial and commercial product requirements on the terms set forth in the Zogenix Agreement. |
The Company retains the right to terminate the Zogenix Agreement with respect to specific countries if Zogenix fails to advance the development of the product in such country, either directly or through a sublicensee. In addition, either party may terminate the Zogenix Agreement upon insolvency or bankruptcy of the other party, upon written notice of a material uncured breach or if the other party takes any act impairing such other party’s relevant intellectual property rights. Zogenix may terminate the Zogenix Agreement upon written notice if during the development or commercialization of the product, the product becomes subject to one or more serious adverse drug experiences or if either party receives notice from a regulatory authority, independent review committee, data safety monitory board or other similar body alleging significant concern regarding a patient safety issue. Zogenix may also terminate the Zogenix Agreement with or without cause, at any time upon prior written notice. |
The following table provides a summary of collaborative research and development revenue recognized under the agreements with Zogenix (in thousands). The cumulative aggregate payments received by the Company as of December 31, 2014 were $14.3 million under these agreements. |
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| | Year Ended December 31, | |
| | 2014 | | | 2013 | | | 2012 | |
Ratable recognition of upfront payment | | $ | 255 | | | $ | 241 | | | $ | 312 | |
Research and development expenses reimbursable by Zogenix | | | 4,176 | | | | 677 | | | | 1,560 | |
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Total collaborative research and development revenue | | $ | 4,431 | | | $ | 918 | | | $ | 1,872 | |
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Agreement with Impax Laboratories, Inc. |
On January 3, 2014, the Company and Impax Laboratories, Inc. (Impax) entered into a definitive agreement (the Impax Agreement). Pursuant to the Impax Agreement, the Company has granted Impax an exclusive worldwide license to the Company’s proprietary TRANSDUR transdermal delivery technology and other intellectual property to develop and commercialize ELADUR, the Company’s investigational transdermal bupivacaine patch for the treatment of pain associated with post-herpetic neuralgia (PHN), in addition to selling certain assets and rights in and related to the product. Impax will control and fund the development and commercialization programs, and the parties will establish a joint management committee to oversee, review and coordinate the development and commercialization activities of the parties under the Impax Agreement. Impax will reimburse the Company for certain future research and development it may be requested to conduct on the product. |
In connection with the Impax Agreement, Impax paid a non-refundable upfront fee to the Company of $2.0 million in January 2014. The Company’s technology transfer activities were considered integral to utilizing the licensed intellectual property and, accordingly, the deliverables were accounted for as a single unit of accounting. The $2.0 million upfront fee was recognized as collaborative research and development revenue in the first quarter of 2014 when the license to the intellectual property right was delivered and the technology transfer with respect to this product candidate was completed. Impax agreed to make contingent cash payments to the Company of up to $61.0 million payable based upon the achievement of predefined milestones, of which $31.0 million are development-based milestones and $30.0 million are sales-based milestones (none of which has been achieved as of December 31, 2014). Since the milestones are expected to be achieved at a point in time when there are no performance obligations or remaining deliverables of the Company, the milestones are expected to be recognized in full upon achievement. Upon the first commercialization of ELADUR by Impax, the Company would also receive a tiered mid single-digit to low double-digit royalty on annual net product sales determined on a country-by-country basis. Impax is also required to pay to the Company a percentage of fees received in connection with any sublicense of the licensed rights. Impax may terminate the Impax Agreement without cause at any time upon prior written notice, and either party may terminate the Impax Agreement upon certain circumstances including written notice of a material uncured breach. |
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The following table provides a summary of collaborative research and development revenue recognized under the Impax Agreement (in thousands). The cumulative aggregate payments received by the Company as of December 31, 2014 were $2.1 million under the agreement. |
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| | Year Ended December 31, | |
| | 2014 | | | 2013 | | | 2012 | |
Ratable recognition of upfront payment | | $ | 2,000 | | | $ | — | | | $ | — | |
Research and development expenses reimbursable by Impax | | | 106 | | | | — | | | | — | |
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Total collaborative research and development revenue | | $ | 2,106 | | | $ | — | | | $ | — | |
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Agreement with Santen Pharmaceutical Co., Ltd. |
On December 11, 2014, the Company and Santen Pharmaceutical Co., Ltd. (Santen) entered into a definitive agreement (the Santen Agreement). Pursuant to the Santen Agreement, the Company granted Santen an exclusive worldwide license to the Company’s proprietary SABER formulation platform and other intellectual property to develop and commercialize a sustained release product utilizing the Company’s SABER technology to deliver an ophthalmology drug. Santen will control and fund the development and commercialization program, and the parties will establish a joint management committee to oversee, review and coordinate the development activities of the parties under the Santen Agreement. |
In connection with the Santen agreement, Santen agreed to pay the Company an upfront fee of $2.0 million in cash and to make contingent cash payments to the Company of up to $76.0 million upon the achievement of certain milestones, of which $13.0 million are development-based milestones and $63.0 million are commercialization-based milestones including milestones requiring the achievement of certain product sales targets (none of which has been achieved as of December 31, 2014). Santen will also pay for certain Company costs incurred in the development of the licensed product. If the product is commercialized, the Company would also receive a tiered royalty on annual net product sales ranging from single-digit to the low double digits, determined on a country-by-country basis. As of December 31, 2014, the cumulative aggregate payments received by the Company under this agreement were $2.0 million. |
The following table provides a summary of collaborative research and development revenue recognized under the Santen Agreement (in thousands). |
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| | Year Ended December 31, | |
| | 2014 | | | 2013 | | | 2012 | |
Ratable recognition of upfront payment | | $ | 15 | | | $ | — | | | $ | — | |
Research and development expenses reimbursable by Santen | | | 1 | | | | — | | | | — | |
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Total collaborative research and development revenue | | $ | 16 | | | $ | — | | | $ | — | |
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Agreement with Hospira, Inc. |
In June 2010, the Company and Hospira, Inc. (Hospira) entered into a license agreement to develop and market POSIDUR (SABER-bupivacaine) in the U.S. and Canada. POSIDUR is the Company’s investigational post-operative pain relief depot that utilizes the Company’s patented SABER technology to deliver bupivacaine to provide up to three days of pain relief after surgery. |
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Under the terms of the agreement, Hospira made an upfront payment of $27.5 million. In March 2012, the Company was notified that Hospira was terminating the agreement effective September 28, 2012, or, as permitted under the agreement, at an earlier date elected by the Company. Hospira’s termination returned to the Company the U.S. and Canadian rights to develop and commercialize POSIDUR and as such the Company now holds worldwide rights to POSIDUR. As a result of the termination of the Hospira agreement for POSIDUR, the Company recognized as revenue during the first quarter of 2012 the remaining $21.8 million of deferred revenue related to the upfront fee of the development and license agreement as the Company has no remaining performance obligations under the agreement; this recognition of revenue did not result in additional cash proceeds to the Company. |
The following table provides a summary of collaborative research and development revenue recognized under the agreement with Hospira (in thousands). The cumulative aggregate payments received by the Company as of December 31, 2014 were $40.7 million under this agreement. |
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| | Year Ended December 31, | |
| | 2014 | | | 2013 | | | 2012 | |
Recognition of upfront payment (1) | | $ | — | | | $ | — | | | $ | 21,758 | |
Research and development expenses reimbursable by Hospira | | | — | | | | — | | | | 1,968 | |
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Total collaborative research and development revenue | | $ | — | | | $ | — | | | $ | 23,726 | |
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-1 | The Company’s estimate of the term of its continuing performance obligation was revised in the first quarter of 2012 as a result of the termination of the POSIDUR agreement by Hospira. As a result of the termination of the Hospira agreement for POSIDUR, the Company recorded as revenue during the first quarter of 2012 the remaining $21.8 million deferred revenue related to the upfront fee of the development and license agreement. | | | | | | | | | | | |
Agreement with Nycomed |
In November 2006, the Company entered into a development and license agreement with Nycomed, which was amended in February 2010 and February 2011. Under the terms of the agreement, as amended, the Company licensed to Nycomed the exclusive commercialization rights to POSIDUR for the European Union (E.U.) and certain other countries. |
Under the terms of the agreement as amended, Nycomed paid the Company an upfront license fee of $14.0 million and an $8.0 million development-based milestone payment. In October 2011, Takeda Pharmaceutical Company Limited (Takeda) acquired Nycomed and thereby assumed the rights and obligations of Nycomed under the agreements the Company formerly had in place with Nycomed. In January 2012, the Company was notified that Takeda (through Nycomed) was terminating the license agreement with us, and thereby returning their right to develop and commercialize POSIDUR in Europe and their other licensed territories to us. As a result of the termination of the Nycomed agreement for POSIDUR, the Company recognized revenue during the first quarter of 2012 for the remaining $3.7 million of deferred revenue related to the upfront fee of the development and license agreement as the Company had no remaining performance obligations under the agreement; this recognition of revenue did not result in additional cash proceeds to the Company. |
The Company’s net share of the research and development costs for POSIDUR under the Company’s agreement with Nycomed was zero in 2014, 2013 and 2012. |
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The following table provides a summary of collaborative research and development revenue recognized under the agreement with Nycomed with regard to POSIDUR (in thousands). The cumulative aggregate payments received by the Company from Nycomed as of December 31, 2014 were $37.3 million under this agreement. In addition, the cumulative aggregate payments paid by the Company to Nycomed were $9.0 million as of December 31, 2014. |
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| | Year Ended December 31, | |
| | 2014 | | | 2013 | | | 2012 | |
Recognition of upfront payment (1) | | $ | — | | | $ | — | | | $ | 3,705 | |
Research and development expenses reimbursable by Nycomed | | | — | | | | — | | | | — | |
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Total collaborative research and development revenue | | $ | — | | | $ | — | | | $ | 3,705 | |
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-1 | The Company’s estimate of the term of its continuing performance obligation was revised in the first quarter of 2012 as a result of the termination of the agreement by Nycomed. As a result of the termination of the Nycomed agreement for POSIDUR, the Company recorded as revenue during the first quarter of 2012 the remaining $3.7 million deferred revenue related to the upfront fee of the development and license agreement. | | | | | | | | | | | |
Agreement with Alpharma Ireland Limited, an affiliate of Alpharma Inc. (Alpharma) (acquired by King which subsequently was acquired by Pfizer) |
Effective October 2008, the Company and Alpharma, entered into a development and license agreement granting Alpharma the exclusive worldwide rights to develop and commercialize ELADUR, DURECT’s investigational transdermal bupivacaine patch. As a result of the acquisition of Alpharma by King in December 2008, King assumed the rights and obligations of Alpharma under the agreement. As a result of the acquisition of King by Pfizer in February 2011, Pfizer assumed the rights and obligations of King under the agreement; accordingly, amounts formally contributed to King are shown as Pfizer figures. |
Under the terms of the agreement, Alpharma paid the Company an upfront license fee of $20.0 million. The $20.0 million upfront fee had been recognized as collaborative research and development revenue ratably over the term of the Company’s continuing involvement with Pfizer with respect to ELADUR. The Company’s estimate of the remaining term of its continuing involvement was adjusted in the third quarter of 2011 as a result of an updated development plan for ELADUR. |
In February 2012, the Company was notified that Pfizer was terminating the agreement, effective August 30, 2012, or, as permitted under the agreement, at an earlier date elected by the Company. Pfizer’s termination returned to the Company worldwide rights to develop and commercialize ELADUR. As a result of the termination of the agreement for ELADUR, the Company recognized revenue during the first quarter of 2012 for the remaining $9.9 million of deferred revenue related to the upfront fee of the development and license agreement as the Company has no remaining performance obligations under the agreement; this recognition of revenue did not result in additional cash proceeds to the Company. |
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The following table provides a summary of collaborative research and development revenue recognized under the agreement with Pfizer with regard to ELADUR (in thousands). The cumulative aggregate payments received by the Company as of December 31, 2014 were $29.2 million under this agreement. |
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| | Year Ended December 31, | |
| | 2014 | | | 2013 | | | 2012 | |
Recognition of upfront payment (1) | | $ | — | | | $ | — | | | $ | 9,895 | |
Research and development expenses reimbursable by Pfizer | | | — | | | | — | | | | 124 | |
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Total collaborative research and development revenue | | $ | — | | | $ | — | | | $ | 10,019 | |
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-1 | The Company’s estimate of the term of its continuing performance obligation was revised in the first quarter of 2012 as a result of the termination of the agreement by Pfizer. As a result of the termination of this agreement for ELADUR, the Company recorded as revenue during the first quarter of 2012 the remaining $9.9 million deferred revenue related to the upfront fee of the development and license agreement. | | | | | | | | | | | |