AKAO 2017 Annual Report

20 developed under this agreement. The agreement requires us to pay Ionis a low double-digit share of non-royalty sublicensing revenues that we receive from certain sublicensees for the grant of sublicenses under our agreement with Ionis, provided that the maximum amount we are required to pay Ionis with respect to the sum of all development and regulatory milestones and non-royalty sublicensing revenue payment obligations for plazomicin, but only to the extent it qualifies as the first aminoglycoside product under the agreement, is $19.5 million. Likewise, our cumulative development and regulatory milestone payment and non-royalty sublicensing revenues payment obligations for a possible second aminoglycoside product under the agreement with Ionis will not exceed $9.75 million. To date, we have made development milestone payments of $7.0 million to Ionis with respect to plazomicin, $6.5 million of which was paid in cash and $0.5 million of which was paid in the form of our Series B convertible preferred stock. We are 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 certain aminoglycoside products in a calendar year. If any aminoglycoside product covered by the agreement is successfully commercialized, we will be required to pay royalties to Ionis in the low single digits on worldwide net sales of licensed products by us, our affiliates and sublicensees. Our license agreement with Ionis will continue for as long as we are obligated to pay royalties to them, which will be on a product-by-product basis until the later of (a) ten years from the date of first commercial sale of an aminoglycoside product covered by the agreement in the United States, Japan or Europe; and (b) the abandonment, revocation, invalidation or expiration of the last valid claim of a patent covered under the agreement which covers such product, not to exceed twenty years after the first commercial sale in the United States, Japan or Europe. Either party may terminate the agreement for the uncured material breach of the other party, and Ionis may terminate the agreement if we fail to make timely payments, subject to a specified cure period. We may also terminate the agreement or the license with respect to a particular product without cause upon 60 days’ notice. Thermo Fisher Collaborative Development and Commercialization Agreement In April 2016, we entered into a collaborative development and commercialization agreement (the “Assay Agreement”) with Microgenics Corporation (“Thermo Fisher”), a wholly owned subsidiary of Thermo Fisher Scientific Inc. Under the Assay Agreement, we and Thermo Fisher are co-developing and commercializing an in vitro assay to measure levels of plazomicin in serum and plasma to guide and monitor dosing regimens so that exposures fall within the desired range. Thermo Fisher submitted a 510(k) premarket submission in January 2018, which was accepted for substantive review on February 7, 2018. If plazomicin and the assay are approved, we and Thermo Fisher currently plan to have a commercial assay available near the time of the commercial launch of plazomicin in the United States. The assay developed under the Assay Agreement is intended to provide TDM to certain patients receiving plazomicin. Thermo Fisher is responsible for the research, development, manufacture and sale of the assay. Depending on the commercialization strategy for the assay, we are required to pay Thermo Fisher up to an aggregate amount of approximately $6.8 million in milestone payments for the achievement of certain development, manufacturing and regulatory milestones. Intellectual property rights relating solely to the assay developed under the Assay Agreement are owned by Thermo Fisher and intellectual property rights relating solely to plazomicin are owned by us. In addition, each party retains ownership of certain background intellectual property and improvements thereto. Under the Assay Agreement, Thermo Fisher also has the worldwide exclusive rights to manufacture this assay during the period in which we continue to develop and commercialize plazomicin (unless the Assay Agreement is earlier terminated). Thermo Fisher also has the exclusive right to commercialize this assay under the Thermo Scientific name in each country in the territory in which we are commercializing plazomicin, for as long as we are commercializing plazomicin in such country. We are required to prioritize the promotion of the assay developed under the Assay Agreement relative to the promotion of any other assay capable of measuring plazomicin in certain countries, including the United States, Japan and Europe, so long as Thermo Fisher is capable of providing sufficient supply of the assay. The Assay Agreement further requires us to make certain annual payments to Thermo Fisher if commercialization targets are not met during certain periods following commercialization. If Thermo Fisher abandons its commercialization of the assay, Thermo Fisher is required to negotiate an agreement for the continued supply of the assay to us or our distributor. The term of the Assay Agreement continues until we cease development and commercialization of plazomicin. Either we or Thermo Fisher may terminate the Assay Agreement for the other party’s uncured material breach or bankruptcy (or similar event), and we may terminate without cause upon sixty days’ written notice to