AKAO 2017 Annual Report

122 Accrued Liabilities Accrued liabilities consisted of the following (in thousands): December 31, 2017 2016 Accrued clinical and development expenses.................................................... $ 6,480 $ 3,681 Payroll and related bonus expenses.................................................................. 6,281 4,941 Other................................................................................................................. 2,680 1,076 $ 15,441 $ 9,698 5. License and Collaboration Agreements Thermo Fisher Scientific, Inc. In April 2016, the Company entered into an agreement with its collaboration partner, Thermo Fisher Scientific, Inc. (“Thermo Fisher”), to develop and commercialize an assay to support plazomicin. If approved, the Company and Thermo Fisher plan to have a commercial assay for plazomicin available at launch to enable patients to receive safe and efficacious doses of plazomicin. In accordance with the terms of the agreement, the Company is required to make milestone payments with respect to research, development, regulatory and commercialization milestones (if any). All such milestone payments may total, in aggregate, up to but no more than $6.8 million, per the November 2017 amended agreement. In further consideration of this agreement, in the event of a successful commercialization of the assay, the Company is required to pay a minimum threshold annual revenue to Thermo Fisher. For the years ended December 31, 2017, December 31, 2016 and December 31, 2015 the milestone payments and the cost recorded as research and development expense were $2.5 million$1.2 million and zero, respectively. Crystal Biosciences, Inc. In May 2016, the Company entered into a collaboration and license agreement with Crystal Biosciences, Inc. (“Crystal”). Pursuant to the terms of this agreement, the Company and Crystal agreed to collaborate on the discovery of monoclonal antibodies against multiple targets. Crystal agreed to conduct the initial discovery work with its antibody platform and the Company has the right to develop and commercialize the antibodies discovered through this collaboration. The Company is required to provide signing and milestone payments with respect to research, development, regulatory and commercialization milestones (if any). All such milestone payments may total, in aggregate, up to but no more than $20.6 million. The upfront signing fee, technology access fees and research funding were recorded as research and development expense during the years ended December 31, 2017 and 2016. This collaboration and license agreement also provides that the Company shall pay royalties equal to a low single- digit percentage of annual worldwide net sales of the commercialized product. Ionis Pharmaceuticals In January 2006, the Company entered into a license agreement with Ionis Pharmaceuticals, Inc. (“Ionis”). Ionis granted the Company an exclusive, worldwide license with the right to grant and authorize sublicenses related to the research and development of aminoglycoside products. As an up-front fee, the Company issued 97,402 shares of preferred Series A convertible stock at a fair value of $15.40 per share. This license fee of $1.5 million was recorded as research and development expense in 2006. In further consideration of this license, and in accordance with the terms of the agreement, the Company is required to make milestone payments with respect to development, regulatory and commercialization milestones, and to pay a percentage of revenue received from sublicensees (if any). All such milestone and sublicense revenue payments may total, in the aggregate, up to but no more than $19.5 million for the first product and $9.8 million following the second product commercialized under the agreement with Ionis. The Company is also required to pay additional milestone payments of up to $20.0 million in the aggregate upon the first achievement of specified threshold levels of annual net sales of all aminoglycoside products in a calendar year. The license agreement also provides that the Company shall pay royalties equal to a low single-digit percentage of annual worldwide net sales of any licensed products, including, if applicable, plazomicin.