9.	Collaborative Research, Development and License Agreements

AstraZeneca

In September 2006, we entered into a three year research collaboration and license agreement with AstraZeneca for the discovery and development of TLR9 agonist-based therapies for the treatment of asthma and chronic obstructive pulmonary disease.

In October 2011, we amended our agreement with AstraZeneca to provide that we will conduct initial clinical development of AZD1419 and AstraZeneca agreed to fund all program expenses to cover the cost of development activities through Phase 2a. Under the terms of the amended agreement, we received an initial payment of $3 million in 2011 to begin the clinical development program. In the first quarter of 2012, we received a $2.6 million payment to advance AZD1419 into preclinical toxicology studies, which were completed in the third quarter of 2012. We and AstraZeneca agreed to advance AZD1419 towards a Phase 1 clinical trial, which resulted in a development funding payment of $6 million received in the fourth quarter of 2012.

In January 2014, we amended our agreement with AstraZeneca for the clinical development of AZD1419 whereby responsibility for conducting clinical trials was transferred from Dynavax to AstraZeneca upon completion of the Phase 1 trial. In the first quarter of 2014, we received a $5.4 million payment that was due upon execution of this amended agreement.

In August 2014, we announced the results of a Phase 1 study in which AZD1419 or placebo was delivered by inhalation to 45 healthy volunteers. The primary study objective was to assess the safety of ascending doses of AZD1419 administered weekly for up to 4 weeks. Doses up to 15.4 mg/week were well tolerated and no serious adverse events were observed in treated subjects. Secondary endpoints assessing pharmacodynamics were met, with dose-dependent induction of interferon-regulated genes in sputum and blood cells.

In December 2014, we again amended our agreement with AstraZeneca for the clinical development of AZD1419. Under the terms of this amendment, AstraZeneca will fully fund and Dynavax will conduct a Phase IIa safety and efficacy trial of AZD1419 in patients with asthma. In the fourth quarter of 2014, we received an $8.0 million payment due upon execution of this amended agreement.

Under the terms of this agreement, as amended, we are eligible to receive up to $100 million in additional milestone payments. Additionally, upon commercialization, we are eligible to receive tiered royalties ranging from the mid to high single-digits based on product sales of any products originating from the collaboration. We have the option to co-promote in the United States products arising from the collaboration, if any. AstraZeneca has the right to sublicense its rights upon our prior consent.

Revenue from the $5.4 million payment received in the first quarter of 2014 was deferred and is being recognized over the estimated remaining period of performance, which is approximately 48 months. Revenue from the $8.0 million payment received in the fourth quarter of 2014 was deferred and is being recognized over the estimated remaining period of performance, which is approximately 30 months. Revenue from the $3.0 million initial payment received in 2011 was deferred and is being recognized over the estimated remaining period of performance, which is approximately 74 months. Revenue from the development funding payments is being recognized as the development work is performed.

The following table summarizes the revenues earned under our agreement with AstraZeneca, included as collaboration revenue in our consolidated statements of operations (in thousands):


	Year ended December 31,
	2014		2013		2012
Initial payment	$	681	$	720	$	720
Subsequent payment		2,554		-		-
Performance of research activities		2,174		2,507		2,462
Total	$	5,409	$	3,227	$	3,182

As of December 31, 2014 and 2013, total deferred revenue from the initial payment, subsequent payment and development funding payments was $12.8 million and $4.8 million, respectively.

Absent early termination, the agreement will expire when all of AstraZeneca’s payment obligations expire. AstraZeneca has the right to terminate the agreement at any time upon prior written notice and either party may terminate the agreement early upon written notice if the other party commits an uncured material breach of the agreement.

GlaxoSmithKline

In December 2008, we entered into a worldwide strategic alliance with GSK to discover, develop and commercialize TLR inhibitors. Under the terms of the arrangement, as amended, we agreed to conduct research and early clinical development of product candidates and GSK received an option to license those candidates. Under the collaboration, we conducted a Phase 1 clinical trial in the lead TLR 7/9 program with DV1179 to assess its safety and tolerability in healthy volunteers followed by a Phase 1b/2a study of safety and pharmacodynamics in patients with systematic lupus erythematosus (“SLE”).

In August 2014, we announced results of the Phase 1b/2a clinical trial in which DV1179 did not meet the primary or secondary pharmacodynamic endpoints. The agreement with GSK expired in November 2014. The Company has regained global rights to continue the development of DV1179 and other TLR 7/9 inhibitors for all indications.

Under the terms of the arrangement, as amended, we received an initial payment of $10 million in 2008. The deliverables under this arrangement did not have stand-alone value and so did not qualify as separate units of accounting. Revenue from the initial payment from GSK was deferred and is being recognized over the estimated period of performance under the agreement, initially estimated to be seven years. In 2013 we reevaluated and revised the estimated period of performance under the agreement resulting in the recognition of $1.1 million of additional revenue for the year ended December 31, 2014.

The following table summarizes the revenues recognized under our agreement with GSK, included as collaboration revenue in our consolidated statements of operations (in thousands):

	Year ended December 31,
	2014		2013		2012
Initial payment	$	2,524	$	1,702	$	1,428
Total	$	2,524	$	1,702	$	1,428

As of December 31, 2014, no deferred revenue relating to the initial payment remains. As of December 31, 2013, deferred revenue relating to the initial payment was $2.5 million.

National Institutes of Health (“NIH”) and Other Funding

We have been awarded various grants from the NIH and the NIH’s National Institute of Allergy and Infectious Disease (“NIAID”) in order to fund research. The awards are related to specific research objectives and we earn revenue as the related research expenses are incurred. We have earned revenue during the years ended December 31, 2014 and 2013 from the following awards:

·	August 2014, NIH awarded us $0.2 million to fund research in developing a transgenic mouse model to study human TLR9 role in disease.

·	September 2013, NIH awarded us $0.2 million to fund research in developing TLR antagonists for therapy of hepatic fibrosis and cirrhosis.

·	June 2012, NIH awarded us $0.6 million to fund research in screening for inhibitors of TLR8 for treatment of autoimmune diseases.

·	May 2012, NIH awarded us $0.4 million to fund development of TLR8 inhibitors for treatment of rheumatoid arthritis.

·	July 2011, NIH awarded us $0.6 million to fund research in preclinical models of skin autoimmune inflammation.

August 2010, NIAID awarded us a grant to take a systems biology approach to study the differences between individuals who do or do not respond to vaccination against the hepatitis B virus. This study will be one of several projects conducted under a grant to the Baylor Institute of Immunology Research in Dallas as part of the Human Immune Phenotyping Centers program. We have been awarded a total of $1.4 million under this grant.

·	September 2008, NIAID awarded us a five-year $17 million contract to develop our ISS technology using TLR9 agonists as vaccine adjuvants. The contract supports adjuvant development for anthrax as well as other disease models.

The following table summarizes the revenues recognized under the various arrangements with the NIH and NIAID, included as grant revenue in our consolidated statements of operations (in thousands):


	Year ended December 31,
	2014		2013		2012
NIAID contracts	$	2,095	$	4,103	$	3,571
All other NIH contracts		593		1,035		368
Total grant revenue	$	2,688	$	5,138	$	3,939