AKAO 2017 Annual Report

90 preparation and submission of an NDA to the FDA. In addition, in April 2017, BARDA modified Option 1 to allow for an additional $0.5 million of contract funding. Through December 31, 2017, the total committed amount of $124.3 million under the BARDA Contract has been recorded as revenue. In September 2017, BARDA awarded us funding to support the development, including Phase 1 and Phase 3 clinical studies and manufacturing and analytical testing, of C-Scape (“BARDA C-Scape Contract”). This contract provides for payments to us based on direct costs incurred and allowances for overhead, plus a fee, where applicable. The total committed funding under this contract is $12.0 million, including subsequent option periods that, if exercised, would bring the total value of the award to $18.0 million. Through December 31, 2017, a total of $1.0 million was recorded as revenue under this BARDA contract, with $11.0 million of funding remaining. For the years ended December 31, 2017, 2016 and 2015, total revenue recognized under these contracts was $8.7 million, $39.5 million, and $17.6 million, respectively, of which $1.0 million and $11.7 million were included in contracts receivable at December 31, 2017 and 2016, respectively. NIAID In July 2014, we were awarded a one-year, $0.4 million grant by NIAID to conduct discovery research on novel antibiotics targeting gram-negative bacteria. The contract was subsequently modified to extend through July 31, 2016. In July 2015, we were awarded a contract by NIAID for $1.5 million through June 30, 2016, with total funding of up to $4.5 million available if all options are exercised under the contract. In January 2016, an additional committed funding of $0.5 million was added to the awarded funding and in April 2016, NIAID modified the contract to exercise an option which increased the total contract committed funding to $4.4 million. In April 2017, NIAID modified the contract to add committed funding of $0.3 million to the first option, bringing the total committed funding to $4.7 million. In June 2017, NIAID modified the contract to exercise the second option of $0.6 million and extended performance through August 2018, bringing the total committed funding to $5.3 million, of which $0.4 million remains available. We do not expect to recognize additional revenues under this contract in future periods For the years ended December 31, 2017, 2016 and 2015, we recognized revenue under the NIAID Contracts of $1.3 million, $2.3 million and $1.4 million, respectively, of which $0.2 million and $0.5 million were included in contracts receivable at December 31, 2017 and 2016, respectively. Defense Threat Reduction Agency (“DTRA”) In November 2012, the DTRA, a division of the U.S. Department of Defense, terminated for convenience a contract with us to develop novel antibacterials for the treatment of biodefense pathogens. In connection with the termination, we sought payment for additional expenses we had incurred. Effective April 30, 2015, we reached a settlement of our claim with DTRA. The net settlement of $7.1 million, together with sums previously received, constitutes complete and final settlement of the contract. For the years ended December 31, 2017, 2016 and 2015, we recognized revenue under the DTRA Contract of zero, zero and $7.1 million, respectively. Research and Development Expenses For the years ended December 31, 2017, 2016 and 2015, research and development expenses were $95.6 million, $74.0 million and $40.2 million, respectively. Research and development expenses consist primarily of costs associated with research, discovery and preclinical studies of potential new drug compounds, plus product development efforts related to clinical trials and materials manufacturing processes. Research and development costs are expensed as incurred and include the following: • expenses incurred under agreements with CROs, investigative sites, and consultants that conduct our clinical trials and a substantial portion of our preclinical activities; • employee and consultant-related expenses, which include salaries, benefits, stock-based compensation and consulting fees;