AKAO 2017 Annual Report

93 Contract Revenue Contract revenue in each period related solely to funding pursuant to our government contracts. Contract revenue increased $15.7 million to $41.8 million for the year ended December 31, 2016 from $26.1 million for the year ended December 31, 2015. This increase was primarily due to an increase in research and development services performed under our BARDA and NIAID contracts, partially offset by a $7.1 million settlement of our claim with DTRA related to our research contract in 2015. Research and Development Expenses Research and development expenses increased $33.8 million to $74.0 million for the year ended December 31, 2016 from $40.2 million for the comparable period in 2015. This was primarily due to increases of $20.4 million in the external expenses related to our plazomicin program, mainly attributable to the Phase 3 EPIC trial of plazomicin, $5.9 million in consulting and non-clinical costs for research programs other than plazomicin, including $2.2 million for license fees under a collaboration and license agreement for our early research program, and $7.5 million in personnel and overhead related costs as headcount increased in our research and development organization since 2015. We record research and development expenses by program where directly identifiable. In the table below, we have allocated indirect research and development costs based on time charged directly to programs by research and development employees. Indirect research and development costs include employee benefit expenses, employee time not charged directly to a program, laboratory supplies and expenses, and allocated facility expenses. The following table illustrates the components of our research and development expenses during the periods indicated: Year Ended December 31, 2016 2015 Change (in thousands) Research and development expenses by program: Plazomicin program .................................................................... $ 57,818 $ 30,905 $ 26,913 Other research programs ............................................................. 16,181 9,323 6,858 Total research and development expenses........................................ $ 73,999 $ 40,228 $ 33,771 General and Administrative Expenses General and administrative expenses increased $4.7 million to $17.1 million for the year ended December 31, 2016 from $12.4 million for the comparable period in 2015. The increase in general and administrative expenses was primarily due to an increase of $2.6 million in personnel and facility related costs, an increase of $0.5 million in consulting and professional fees, and an increase of $1.6 million in costs to support plazomicin development and manufacture, and to prepare for registration and commercialization. Interest Expense Interest expense increased $1.6 million to $2.3 million for the year ended December 31, 2016 from $0.7 million for the year ended December 31, 2015. The increase was a result of the full year effect of borrowing and the additional $10.0 million of borrowings under our former loan and security agreement with Solar Capital in June 2016.