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SEC Filings

10-Q
SERES THERAPEUTICS, INC. filed this Form 10-Q on 11/08/2018
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aggregate amount of the transaction price allocated to the remaining performance obligation of the Company’s license agreement with NHS was approximately $171,200.

Contract Balances from Contracts with Customers

The following table presents changes in the Company’s contract liabilities during the nine months ended September 30, 2018 and 2017(in thousands):

 

 

 

Balance as of

January 1, 2018

 

 

Additions

 

 

Deductions

 

 

Balance as of

September

30, 2018

 

Nine months ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

 

123,783

 

 

 

393

 

 

 

(16,721

)

 

 

107,455

 

 

 

 

Balance as of January 1, 2017

 

 

Additions

 

 

Deductions

 

 

Balance as of

September

30, 2017

 

Nine months ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

 

108,814

 

 

 

 

 

 

(9,044

)

 

 

99,770

 

During the three and nine months ended September 30, 2018 we recognized the following revenues as a result of changes in the the contract liability balances in the respective periods (in thousands):

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenue recognized in the period from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts included in the contract liability at the beginning

   of the period

 

 

8,684

 

 

 

3,015

 

 

 

16,721

 

 

 

9,044

 

 

The timing of revenue recognition, billings and cash collections results in contract assets and contract liabilities on the consolidated balance sheets.

When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met.

License and Collaboration Arrangements

In January 2016, the Company entered into the Collaboration and License Agreement (“License Agreement”) with NHS for the development and commercialization of certain product candidates in development for the treatment and management of CDI and IBD, including UC and Crohn’s disease. The License Agreement supports the development of the Company’s portfolio of products for CDI and IBD in markets outside of the United States and Canada (the “Licensed Territory”). The Company has retained full commercial rights to its entire portfolio of product candidates with respect to the United States and Canada.

Under the License Agreement, the Company granted to NHS an exclusive, royalty-bearing license to develop and commercialize, in the Licensed Territory, certain products based on its microbiome technology that are being developed for the treatment of CDI and IBD, including SER-109, SER-262, SER-287 and SER-301 (collectively, the “NHS Collaboration Products”). The License Agreement sets forth the Company’s and NHS’ respective obligations for development, commercialization, regulatory and manufacturing and supply activities for the NHS Collaboration Products with respect to the licensed fields and the Licensed Territory.

In exchange for the license, NHS agreed to pay the Company an upfront cash payment of $120,000, which the Company received in February 2016. NHS also agreed to pay the Company tiered royalties, at percentages ranging from the high single digits to high teens, of net sales of NHS Collaboration Products in the Licensed Territory. The Company is eligible to receive up to $285,000 in development milestone payments, $375,000 in regulatory payments and up to an aggregate of $1,125,000 for the achievement of certain commercial milestones related to the sales of NHS Collaboration Products.

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