9.	Collaborative Research, Development and License Agreements

AstraZeneca

In September 2006, we entered into a 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 would 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 $3.0 million in 2011 to begin the clinical development program. We and AstraZeneca agreed to advance AZD1419 towards a Phase 1 clinical trial, which resulted in a development funding payment of $6.0 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 December 2014, we amended our agreement with AstraZeneca whereby AstraZeneca would fully fund and Dynavax will conduct a Phase 2a 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 amendment, to be applied towards research and development expenses incurred in conducting the Phase 2a study.

In January 2016, we amended our agreement with AstraZeneca whereby AstraZeneca will now conduct a Phase 2a safety and efficacy trial of AZD1419 in patients with asthma that originally was to be conducted by Dynavax. We therefore revised the remaining period of performance of development from June 2018 to September 2016. The remaining balance as of December 31, 2015 related to deferred payments of $5.4 million, received in the first quarter of 2014, and $3.0 million, received in 2011, will be recognized starting in January 2016 over the estimated remaining period of performance of development work through September 2016.

The $8.0 million payment received in December 2014 was also deferred and is being recognized as research and development expenses are incurred.

Payments previously made by AstraZeneca in respect of development activity by us, net of amounts we recognize as development work is performed, will be returned to AstraZeneca or applied to future milestone payments that may be earned by us under the agreement. We have reclassified $7.4 million from deferred revenue as a current liability related to this payment as of December 31, 2015. See Note 17.

Under the terms of this agreement, as amended, we are eligible to receive up to $100 million in additional milestone payments, based on the achievement of certain development and regulatory objectives. 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.

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,
	2015		2014		2013
Initial payment	$	238	$	681	$	720
Subsequent payment		892		2,554		-
Performance of research activities		1,635		2,174		2,507
Total	$	2,765	$	5,409	$	3,227

As of December 31, 2015 and 2014, total deferred revenue from the initial payment, subsequent payment and development funding payments was $2.7 million and $12.8 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 (“GSK”)

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”).

Under the terms of the arrangement, as amended, we received an initial payment of $10 million in 2008. 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.

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. We regained global rights to continue the development of DV1179 and other TLR 7/9 inhibitors for all indications.

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,
	2015		2014		2013
Initial payment	$	-	$	2,524	$	1,702
Total	$	-	$	2,524	$	1,702

As of December 31, 2015 and 2014 no deferred revenue relating to the initial payment remains.

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, 2015, 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.

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,
	2015		2014		2013
NIAID contracts	$	-	$	2,095	$	4,103
All other NIH contracts		683		593		1,035
Total grant revenue	$	683	$	2,688	$	5,138