Note 9 - Collaboration Agreements

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Collaborative Arrangement Disclosure [Text Block]

9. Collaboration agreements:

The Company has entered into a number of collaboration agreements with multiple deliverables under which it may have received non-refundable upfront payments. The Company generally recognizes revenue from upfront payments ratably over the term of its estimated period of performance of research under its collaboration agreements in the event that such arrangements represent a single unit of accounting. The collaborations may also include contractual milestone payments, which relate to the achievement of pre-specified research, development, regulatory and commercialization events. The milestone events coincide with the progression of product candidates from research and development, to regulatory approval and through to commercialization. The process of successfully discovering a new product candidate, having it selected by the collaborator for development and having it approved and ultimately sold for a profit is highly uncertain. As such, the milestone payments that the Company may earn from its collaborators involve a significant degree of risk to achieve.

In March 2014, the Company entered into a new agreement with Genentech for pain genetics, using the Company’s Extreme Genetics discovery platform to focus on identifying genetic targets associated with rare phenotypes where individuals have an inability to perceive pain or where individuals have non-precipitated spontaneous severe pain. Pursuant to the terms of this agreement, any intellectual property arising out of the collaboration will be jointly owned by the Company and Genentech. The Company also granted Genentech a time-limited, exclusive right of first negotiation on a target-by-target basis to form joint drug discovery collaborations. Under the terms of this agreement, Genentech paid an upfront payment of $1,500. The Company is eligible for an additional $2,000 in milestone payments. At the option of the Company, a Genentech affiliate invested $4,455 in a private placement concurrent with the IPO (note 11b).

The Company identified several deliverables under this agreement with Genentech, including non-exclusive licenses to certain intellectual property controlled by the Company, a commitment to participate in a joint steering committee and collaborative research services to be performed by the Company. The Company concluded that the licenses did not have stand-alone value to Genentech without the Company’s technical expertise and joint steering committee participation during the initial two year period. Therefore, the Company has determined that the various deliverables should be considered as a single unit of accounting. As such the Company determined that the $1,500 upfront payment should be recognized as revenue ratably over the expected period of performance, being the two-year period ending March 18, 2016.

The Company believes that the potential milestone payments under this agreement are substantive and at risk at inception of this agreement, and, as such, expects that these future milestone payments will be recognized as revenue in the period that each milestone is achieved. As of September 30, 2014, no such milestone payments have been recognized.

In August 2014, pursuant to an existing collaborative research and license agreement with Genentech entered into in 2011, the Company received an $8,000 milestone payment for the approval of the GDC-0276 Clinical Trial Application by Health Canada. This milestone payment was recognized as revenue in the third quarter of 2014.

The following table is a summary of the revenue recognized from the Company’s collaborations for the three and nine months ended September 30, 2013 and 2014:

	Three months ended September 30,				Nine months ended September 30,
	2013		2014		2013		2014

uniQure:
Milestone payment	$	267	$	14	$	267	$	14
Teva:
Recognition of upfront payment		3,284		3,132		9,891		9,252
Research funding		169		84		463		251
Genentech:
Recognition of upfront payment		824		981		2,483		2,736
Research funding		1,128		994		3,385		3,249
Milestone payment		5,093		7,987		5,093		7,987
Genome BC:
Research funding		21		-		189		-
Total collaboration revenue	$	10,786	$	13,192	$	21,771	$	23,489