|ARRAY BIOPHARMA INC filed this Form 10-K on 08/11/2017|
the AKP agreement were recorded as deferred revenue and has been recognized on a straight-line basis over five years, the period during which management expected that substantial development activities will be performed. License revenue recognized under this agreement was $2.4 million and $0.6 million for the years ended June 30, 2017 and 2016, respectively; at June 30, 2017 and 2016 deferred revenue associated with this agreement was approximately $9.0 million and $11.4 million, respectively. Collaboration revenue recognized under this agreement was $1.1 million and $0.0 million for the years ended June 30, 2017 and 2016, respectively
The milestone payments include up to $11.0 million related to the achievement of four regulatory milestones for up to five drug candidates and up to $52.5 million for a milestone payment at the time of the first commercial sale and
the achievement of three commercialization milestones if certain net sales amounts are achieved for any licensed drug candidates.
Cascadian Therapeutics (formerly Oncothyreon Inc.)
Effective December 11, 2014, Array entered into a License Agreement with Cascadian Therapeutics ("Cascadian"). Pursuant to the License Agreement, Array granted Cascadian an exclusive license to develop, manufacture and commercialize tucatinib/ONT-380 (previously known also as ARRY-380), an orally active, reversible and selective small-molecule HER2 inhibitor currently in Phase 2 / registration clinical trials. The License Agreement replaces and terminates the prior Development and Commercialization Agreement under which Cascadian and Array were jointly developing tucatinib, and going forward, Cascadian will be solely responsible for all preclinical and clinical development, regulatory and commercialization activities relating to tucatinib.
Under the terms of the License Agreement, Cascadian paid Array a non-refundable, up-front fee of $20.0 million. In addition, if Cascadian sublicenses rights to tucatinib to a third party, Cascadian will pay Array a percentage of any sublicense payments it receives, with the percentage varying according to the stage of development of tucatinib at the time of the sublicense. If Cascadian is acquired within three years of the effective date of the License Agreement, and tucatinib has not been sublicensed to another entity prior to such acquisition, then the acquirer will be required to make certain milestone payments of up to $280.0 million to Array, which are primarily based on potential tucatinib sales. Array is also entitled to receive up to a double-digit royalty based on net sales of tucatinib.
Pursuant to the accounting guidance for revenue recognition for multiple-element arrangements, we determined that the exclusive license is the only non-contingent deliverable with stand-alone value under the License Agreement. Array must also expend a nominal amount of effort related to technology transfer, which was completed as of December 31, 2014, but because the technology transfer deliverable does not meet the separation criteria, it was recognized as a combined unit of accounting with the license. Potential payments for a percentage of sublicensing rights, milestone payments and royalties cannot be estimated. Also, at its separate expense Cascadian may request additional technology transfer and/or transition services from Array. Due to uncertainty of the likelihood and timing of all of the potential payments and additional services, their consideration is not considered fixed and determinable, therefore no portion of the up-front fee has been allocated to them.
The entire $20.0 million up-front fee was allocated to the combined license/initial technology transfer unit of accounting, which we recognized in full in license revenue during December 2014.
The License Agreement will expire on a country-by-country basis on the later of 10 years following the first commercial sale of the product in each respective country or expiration of the last to expire patent covering the product in such country, but may be terminated earlier by either party upon material breach of the License Agreement by the other party or the other party’s insolvency, or by Cascadian on 180 days' notice to Array. Cascadian and Array have also agreed to indemnify the other party for certain of their respective warranties and obligations under the License Agreement.
In December 2003, we entered into a Collaboration and License Agreement with AstraZeneca to develop our MEK program. Under the agreement, AstraZeneca acquired exclusive worldwide rights to our clinical development candidate, selumetinib (previously known as AZD6244, or ARRY- 142886), together with two other compounds, which we invented during the collaboration, for oncology indications. We retained the rights to all therapeutic indications for MEK compounds not selected by AstraZeneca for development, subject to the parties' agreement to work exclusively together. In April 2009, the exclusivity of the parties' relationship ended, and both companies are