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BIOCRYST PHARMACEUTICALS INC 10-Q --12-31 71863847 false 0000882796 Yes No Accelerated Filer No 2014 Q3 2014-09-30

Note 1 — Significant Accounting Policies The Company BioCryst Pharmaceuticals, Inc. (the “Company”) is a biotechnology company that designs, optimizes and develops novel small molecule drugs that block key enzymes involved in the pathogenesis of diseases. The Company focuses on rare diseases in which unmet medical needs exist and that are aligned with its capabilities and expertise. The Company was incorporated in Delaware in 1986 and its headquarters is located in Durham, North Carolina. The Company integrates the disciplines of biology, crystallography, medicinal chemistry and computer modeling to discover and develop small molecule pharmaceuticals through the process known as structure-guided drug design. BioCryst has incurred losses and negative cash flows from operations since inception. Based on its current operating plans, the Company expects it has sufficient liquidity, with its existing cash and investments of $127,586, to continue its planned operations into 2016. The Company’s liquidity needs, and ability to address those needs, will largely be determined by the success of its product candidates and key development and regulatory events in the future. In order to continue its operations beyond 2016 it will need to: (1) successfully secure or increase U.S. Government funding of its programs; (2) out-license rights to certain of its product candidates, pursuant to which the Company would receive cash milestones; (3) raise additional capital through equity or debt financings or from other sources; (4) obtain product candidate regulatory approvals, which would generate revenue and cash flow; (5) reduce spending on one or more research and development programs; and/or (6) restructure operations. The Company will continue to incur operating losses and negative cash flows until revenues reach a level sufficient to support ongoing operations. Basis of Presentation Beginning in March 2011, the consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, JPR Royalty Sub LLC (“Royalty Sub”). Royalty Sub was formed in connection with a $30,000 financing transaction the Company completed on March 9, 2011. See Note 4, Royalty Monetization, for a further description of this transaction. All intercompany transactions and balances have been eliminated. The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial reporting and the instructions to Form 10-Q and do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Such financial statements reflect all adjustments that are, in management’s opinion, necessary to present fairly, in all material respects, the Company’s consolidated financial position, results of operations, and cash flows. There were no adjustments other than normal recurring adjustments. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2013 and the notes thereto included in the Company’s 2013 Annual Report on Form 10-K. Interim operating results are not necessarily indicative of operating results for the full year. The balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements included in the Company’s most recent Annual Report on Form 10-K. Reclassifications In the first quarter of 2014, the Company changed its classification of legal costs associated with its patents. This change resulted in $242 and $639 of legal expenses being reclassified from research and development expense to general and administrative expense for the three and nine months ended September 30, 2013, respectively. This reclassification had no effect on previously reported total operating expenses or net loss amounts. Cash and Cash Equivalents The Company generally considers cash equivalents to be all cash held in commercial checking accounts, money market accounts or investments in debt instruments with maturities of three months or less at the time of purchase. The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these items. Restricted Cash Restricted cash as of September 30, 2014 represents cash the Company is required to maintain in an interest bearing certificate of deposit to serve as collateral for a corporate credit card program. Investments The Company invests in high credit quality investments in accordance with its investment policy, which is designed to minimize the possibility of loss. The objective of the Company’s investment policy is to ensure the safety and preservation of invested funds, as well as maintaining liquidity sufficient to meet cash flow requirements. The Company places its excess cash with high credit quality financial institutions, commercial companies, and government agencies in order to limit the amount of its credit exposure. Per its policy, the Company is able to invest in marketable debt securities that may consist of U.S. Government and government agency securities, money market and mutual fund investments, municipal and corporate notes and bonds, commercial paper and asset or mortgage-backed securities, among others. The Company’s investment policy requires it to purchase high-quality marketable securities with a maximum individual maturity of three years and requires an average portfolio maturity of no more than 18 months. Some of the securities the Company invests in may have market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. To minimize this risk, the Company schedules its investments with maturities that coincide with expected cash flow needs, thus avoiding the need to redeem an investment prior to its maturity date. Accordingly, the Company does not believe it has a material exposure to interest rate risk arising from its investments. Generally, the Company’s investments are not collateralized. The Company has not realized any significant losses from its investments. The Company classifies all of its investments as available-for-sale. Unrealized gains and losses on investments are recognized in comprehensive income/(loss), unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations. The Company periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company believes the individual unrealized losses represent temporary declines primarily resulting from interest rate changes. Realized gains and losses are reflected in interest and other income in the Consolidated Statements of Comprehensive Loss and are determined using the specific identification method with transactions recorded on a settlement date basis. Investments with original maturities at date of purchase beyond three months and which mature at or less than 12 months from the balance sheet date are classified as current. Investments with a maturity beyond 12 months from the balance sheet date are classified as long-term. At September 30, 2014, the Company believes that the costs of its investments are recoverable in all material respects. The following tables summarize the fair value of the Company’s investments by type. The estimated fair value of the Company’s fixed income investments are classified as Level 2 in the fair value hierarchy as defined in U.S. GAAP. These fair values are obtained from independent pricing services which utilize Level 2 inputs. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="19" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> September 30, 2014 </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Amortized Cost </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Accrued Interest </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Gross Unrealized Gains </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Gross Unrealized Losses </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Estimated Fair Value </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 45%; 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padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 4,999 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total investments </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 6,275 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 6,279 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="19" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> December 31, 2013 </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Amortized Cost </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Accrued Interest </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Gross Unrealized Gains </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Gross Unrealized Losses </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Estimated Fair Value </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 45%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Obligations of U.S. Government and its agencies </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 4,899 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 4,901 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Corporate debt securities </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 8,528 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 47 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 8,576 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Commercial paper </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 5,994 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 5,996 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total investments </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 19,421 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 48 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 5 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 19,473 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table> The following table summarizes the scheduled maturity for the Company’s investments at September 30, 2014 and December 31, 2013. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2014 </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2013 </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 78%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Maturing in one year or less </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 5,977 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 16,891 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Maturing after one year through two years </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 302 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 2,582 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total investments </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 6,279 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 19,473 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table> Receivables Receivables are recorded for amounts due to the Company related to reimbursable research and development costs from the U.S. Department of Health and Human Services or royalty receivables from Shionogi & Co. Ltd. At September 30, 2014 and December 31, 2013, the Company had the following receivables. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="11" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> September 30, 2014 </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Billed </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Unbilled </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Total </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 67%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> U.S. Department of Health and Human Services </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 474 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 2,764 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 3,238 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Shionogi & Co. Ltd. </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total receivables </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 474 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2,764 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 3,238 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="11" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> December 31, 2013 </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Billed </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Unbilled </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Total </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 67%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> U.S. Department of Health and Human Services </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 90 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,573 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,663 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Shionogi & Co. Ltd. </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 452 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 452 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total receivables </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 542 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 1,573 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2,115 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table> Monthly invoices are submitted to the U.S. Department of Health and Human Services related to reimbursable research and development costs. The Company is also entitled to monthly reimbursement of indirect costs based on rates stipulated in the underlying contract. The Company’s calculations of its indirect cost rates are subject to audit by the federal government. Patents and Licenses The Company seeks patent protection on internally developed processes and products. All patent related legal costs are expensed to general and administrative expenses when incurred as recoverability of such expenditures is uncertain. Accrued Expenses The Company generally enters into contractual agreements with third-party vendors who provide research and development, manufacturing, and other services in the ordinary course of business. Some of these contracts are subject to milestone-based invoicing and services are completed over an extended period of time. The Company records liabilities under these contractual commitments when it determines an obligation has been incurred, regardless of the timing of the invoice. This process involves reviewing open contracts and purchase orders, communicating with applicable Company personnel to identify services that have been performed on its behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of actual cost. The majority of service providers invoice the Company monthly in arrears for services performed. The Company makes estimates of accrued expenses as of each balance sheet date in its financial statements based on the facts and circumstances. The Company periodically confirms the accuracy of its estimates with the service providers and makes adjustments if necessary. Examples of estimated accrued expenses include: <table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 5%; padding-right: 0.8pt">   </td> <td style="width: 5%; padding-right: 0.8pt"> • </td> <td style="width: 90%; padding-right: 0.8pt"> fees paid to Clinical Research Organizations (“CROs”) in connection with preclinical and toxicology studies and clinical trials; </td> </tr> <tr style="vertical-align: top"> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt">   </td> </tr> <tr style="vertical-align: top"> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt"> • </td> <td style="padding-right: 0.8pt"> fees paid to investigative sites in connection with clinical trials; </td> </tr> <tr style="vertical-align: top"> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt">   </td> </tr> <tr style="vertical-align: top"> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt"> • </td> <td style="padding-right: 0.8pt"> fees paid to Contract Manufacturing Organizations (“CMOs”)  in connection with the production of our raw materials, drug substance and drug products; and </td> </tr> <tr style="vertical-align: top"> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt">   </td> </tr> <tr style="vertical-align: top"> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt"> • </td> <td style="padding-right: 0.8pt"> professional fees. </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr> <td style="text-align: center; width: 100%"> 8 </td> </tr> </table> The Company bases its expenses related to clinical trials on its estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and clinical research organizations that conduct and manage clinical trials, including manufacturing drug substance, on the Company’s behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Accrued expenses as of September 30, 2014 and December 31, 2013 included $5,090 and $2,210, respectively, of research and development costs. Income Taxes The liability method is used in the Company’s accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Accumulated Other Comprehensive (Loss) Income Accumulated other comprehensive (loss) income is comprised of unrealized gains and losses on investments available-for-sale and is disclosed as a separate component of stockholders’ equity. No reclassifications out of accumulated other comprehensive (loss) income were recorded during the nine months ended September 30, 2014 and 2013. Revenue Recognition The Company recognizes revenues from collaborative and other research and development arrangements and product sales. Revenue is realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the seller’s price to the buyer is fixed or determinable; and (iv) collectability is reasonably assured. Collaborative and Other Research and Development Arrangements and Royalties Revenue from license fees, royalty payments, milestone payments, and research and development fees is recognized as revenue when the earnings process is complete and the Company has no further continuing performance obligations or the Company has completed the performance obligations under the terms of the agreement. Fees received under licensing agreements that are related to future performance are deferred and recognized over an estimated period determined by management based on the terms of the agreement and the products licensed. In the event a license agreement contains multiple deliverables, the Company evaluates whether the deliverables are separate or combined units of accounting. Revisions to revenue or profit estimates as a result of changes in the estimated revenue period are recognized prospectively. Under certain of our license agreements, the Company receives royalty payments based upon our licensees’ net sales of covered products. The Company recognizes royalty revenues when it can reliably estimate such amounts and collectability is reasonably assured. Reimbursements received for direct out-of-pocket expenses related to research and development costs are recorded as revenue in the Consolidated Statements of Comprehensive Loss rather than as a reduction in expenses. Milestone payments are recognized as revenue upon the achievement of specified events if (1) the milestone is substantive in nature and the achievement of the event was not reasonably assured at the inception of the agreement and (2) the fees are non-refundable and non-creditable. Any milestone payments received prior to satisfying these criteria are recorded as deferred revenue. Under the Company’s contracts with the U.S. Department of Health and Human Services, specifically with the Biomedical Advanced Research and Development Authority (“BARDA/HHS”), and the National Institute of Allergy and Infectious Diseases (“NIAID/HHS”), revenue is recognized as reimbursable direct and indirect costs are incurred. The Company’s advanced development contract with BARDA/HHS for the development of peramivir expired on June 30, 2014 according to its terms. Product Sales Product sales are recognized net of estimated allowances, discounts, sales returns, chargebacks and rebates. The Company recorded the following revenues for the three and nine months ended September 30, 2014 and 2013: <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="7" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Three Months </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="7" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Nine Months </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2014 </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2013 </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2014 </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2013 </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 56%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Royalty revenue </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 5 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 8 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,951 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 2,042 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Collaborative and other research and development revenues: </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.5in"> U.S. Department of Health and Human Services </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 2,937 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 2,085 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 5,323 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 3,834 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.5in"> Shionogi (Japan) </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 296 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 296 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 888 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 888 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total revenues </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 3,238 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2,389 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 8,162 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 6,764 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table>  Research and Development Expenses The Company’s research and development costs are charged to expense when incurred. Research and development expenses include all direct and indirect development costs related to the development of the Company’s portfolio of product candidates. Advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as expense when the related goods are delivered or the related services are performed. Research and development expenses include, among other items, personnel costs, including salaries and benefits, manufacturing costs, clinical, regulatory, and toxicology services performed by CROs and CMOs, materials and supplies, and overhead allocations consisting of various administrative and facilities related costs. Most of the Company’s manufacturing and clinical and preclinical studies are performed by third-party CROs and CMOs. Costs for studies performed by CROs and CMOs are accrued by the Company over the service periods specified in the contracts and estimates are adjusted, if required, based upon the Company’s on-going review of the level of services actually performed. Additionally, the Company has license agreements with third parties, such as Albert Einstein College of Medicine of Yeshiva University (“AECOM”), Industrial Research, Ltd. (“IRL”), and the University of Alabama at Birmingham (“UAB”), which require fees related to sublicense agreements or maintenance fees. The Company expenses sublicense payments as incurred unless they are related to revenues that have been deferred, in which case the expenses are deferred and recognized over the related revenue recognition period. The Company expenses maintenance payments as incurred. Deferred collaboration expenses represent sub-license payments, paid to the Company’s academic partners upon receipt of consideration from various commercial partners, and other consideration paid to our academic partners for modification to existing license agreements. These deferred expenses would not have been incurred without receipt of such payments or modifications from the Company’s commercial partners and are being expensed in proportion to the related revenue being recognized. The Company believes that this accounting treatment appropriately matches expenses with the associated revenue. Stock-Based Compensation All share-based payments, including grants of stock option awards and restricted stock unit awards, are recognized in the Company’s Consolidated Statements of Comprehensive Loss based on their fair values. The fair value of stock option awards is estimated using the Black-Scholes option pricing model. The fair value of restricted stock unit awards is based on the grant date closing price of the common stock. Stock-based compensation cost is recognized as expense on a straight-line basis over the requisite service period of the award. For stock option awards with performance conditions, the Company recognizes compensation expense at the time at which the underlying performance condition has been determined to have occurred. Interest Expense and Deferred Financing Costs Interest expense for the three months and nine months ended September 30, 2014 and 2013 was $1,217 and $1,191, respectively, and $3,684 and $3,536, respectively, and relates to the issuance of the PhaRMA Notes (defined in Note 4). Costs directly associated with the issuance of the PhaRMA Notes have been capitalized and are included in other current assets on the Consolidated Balance Sheets. These costs are being amortized to interest expense over the term of the PhaRMA Notes using the effective interest rate method. Amortization of deferred financing costs included in interest expense was $110 for each of the three months ended September 30, 2014 and 2013, and $329 for each of the nine months ended September 30, 2014 and 2013. Currency Hedge Agreement In connection with the issuance by Royalty Sub of the PhaRMA Notes, the Company entered into a Currency Hedge Agreement (defined in Note 4) to hedge certain risks associated with changes in the value of the Japanese yen relative to the U.S. dollar. The Currency Hedge Agreement does not qualify for hedge accounting treatment; therefore, mark-to-market adjustments are recognized in the Company’s Consolidated Statements of Comprehensive Loss. Cumulative mark-to-market adjustments for the nine months ended September 2014 and 2013 resulted in gains of $732 and $3,168, respectively. Mark-to-market adjustments are determined by a third party pricing model that uses quoted prices in markets that are not actively traded and for which significant inputs are observable directly or indirectly, representing Level 2 in the fair value hierarchy as defined by U.S. GAAP. The Company is also required to post collateral in connection with the mark-to-market adjustments based on thresholds defined in the Currency Hedge Agreement. No hedge collateral was posted under the agreement as of September 30, 2014 and December 31, 2013. Net Loss Per Share Net loss per share is based upon the weighted average number of common shares outstanding during the period. Diluted loss per share is equivalent to basic net loss per share for all periods presented herein because common equivalent shares from unexercised stock options and common shares expected to be issued under the Company’s employee stock purchase plan were anti-dilutive. The calculation of diluted earnings per share for the three months ended September 30, 2014 and 2013 does not include 5,602 and 2,783, respectively, of such potential common shares, as their impact would be anti-dilutive. The calculation of diluted earnings per share for the nine months ended September 30, 2014 and 2013 does not include 5,288 and 1,731, respectively, of such potential common shares, as their impact would be anti-dilutive.  Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Concentration of Market Risk The reimbursement of BCX4430 development expenses is a significant source of revenue and one which has an underlying cash flow stream. This revenue and cash flow is earned under a cost-plus-fixed-fee contract with NIAID/HHS. The Company relies on NIAID/HHS to reimburse predominantly all of the development costs for its BCX4430 program. Accordingly, reimbursement of these expenses represents a significant portion of the Company’s collaborative and other research and development revenues. The completion and/or termination of this program/collaboration could negatively impact the Company’s future Consolidated Statements of Comprehensive Loss and Cash Flows. In addition, the Company also recognizes royalty revenue from the net sales of RAPIACTA®; however, the underlying cash flow from these royalty payments goes directly to pay the interest, and then the principal, on the non-recourse notes payable. Payment of the interest and the ultimate repayment of principal of these notes will be entirely funded by future royalty payments derived from net sales of RAPIACTA. The RAPIACTA royalty stream from Shionogi & Co. Ltd, (“Shionogi”), the Company’s partner in Japan, was insufficient to pay the accrued interest in arrears on the non-recourse PhaRMA Notes by the September 1, 2014 payment date resulting in an event of default with respect to the PhaRMA Notes. Accordingly, the Company has classified the PhaRMA Notes and related accrued interest as current liabilities on its balance sheet as of September 30, 2014. As a result of the event of default, the holders of the PhaRMA Notes may pursue acceleration of the PhaRMA Notes, foreclose on the collateral securing the PhaRMA Notes and the Company’s equity interest in Royalty Sub and exercise other remedies available to them under the indenture in respect of the PhaRMA Notes. In such event, the Company may not realize the benefit of future royalty payments that might otherwise accrue to the Company following repayment of the PhaRMA Notes and it might otherwise be adversely affected. Due to the non-recourse nature of the PhaRMA Notes, in the event of any potential acceleration or foreclosure, the Company believes the primary impact to the Company would be the loss of future royalty payments from Shionogi and legal costs associated with retiring the PhaRMA Notes. In addition, the Company may incur costs associated with liquidating a related Currency Hedge Agreement, which would no longer be required in the event of foreclosure or if the PhaRMA Notes cease to be outstanding. As the PhaRMA Notes are obligations of Royalty Sub, the Company does not currently expect the event of default on the PhaRMA Notes to have a significant impact on the Company’s future results of operations or cash flows. The Company’s drug development activities are performed by a limited group of third party vendors. If any of these vendors were unable to perform their services, this could significantly impact the Company’s ability to complete its drug development activities. Credit Risk Cash equivalents and investments are financial instruments which potentially subject the Company to concentration of risk to the extent recorded on the Consolidated Balance Sheets. The Company deposits excess cash with major financial institutions in the United States. Balances may exceed the amount of insurance provided on such deposits. The Company believes it has established guidelines for investment of its excess cash relative to diversification and maturities that maintain safety and liquidity. To minimize the exposure due to adverse shifts in interest rates, the Company maintains a portfolio of investments with an average maturity of approximately 18 months or less. The majority of the Company’s receivables are due from the U.S. Government, for which there is no assumed credit risk. Recent Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-15 – Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which defines management’s responsibility to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued and to provide related footnote disclosures in certain circumstances. In connection with each annual and interim period, management must assess if there is substantial doubt about the company’s ability to continue as a going concern within one year after the issuance date.  Disclosures are required if conditions give rise to substantial doubt.  This standard is effective for all companies in the first annual period ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company does not expect this ASU will have a material impact on its consolidated financial statements. In May 2014, the FASB issued Accounting Standard Update ("ASU") 2014-09 – Revenue from Contracts with Customers, which provides a single, comprehensive revenue recognition model for all contracts with customers. The core principal of this ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is not permitted and companies can transition to the new standard under the full retrospective method or the modified retrospective method. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. In June 2014, the FASB issued ASU 2014-12 – Compensation – Stock Compensation: Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period, which provides explicit guidance for the accounting treatment for these types of awards. The ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. This update is effective for annual periods and interim periods within those annual periods beginning after December 15, 2014. Early adoption is permitted. The Company does not expect this ASU will have a material impact on its consolidated financial statements.

The Company BioCryst Pharmaceuticals, Inc. (the “Company”) is a biotechnology company that designs, optimizes and develops novel small molecule drugs that block key enzymes involved in the pathogenesis of diseases. The Company focuses on rare diseases in which unmet medical needs exist and that are aligned with its capabilities and expertise. The Company was incorporated in Delaware in 1986 and its headquarters is located in Durham, North Carolina. The Company integrates the disciplines of biology, crystallography, medicinal chemistry and computer modeling to discover and develop small molecule pharmaceuticals through the process known as structure-guided drug design. BioCryst has incurred losses and negative cash flows from operations since inception. Based on its current operating plans, the Company expects it has sufficient liquidity, with its existing cash and investments of $127,586, to continue its planned operations into 2016. The Company’s liquidity needs, and ability to address those needs, will largely be determined by the success of its product candidates and key development and regulatory events in the future. In order to continue its operations beyond 2016 it will need to: (1) successfully secure or increase U.S. Government funding of its programs; (2) out-license rights to certain of its product candidates, pursuant to which the Company would receive cash milestones; (3) raise additional capital through equity or debt financings or from other sources; (4) obtain product candidate regulatory approvals, which would generate revenue and cash flow; (5) reduce spending on one or more research and development programs; and/or (6) restructure operations. The Company will continue to incur operating losses and negative cash flows until revenues reach a level sufficient to support ongoing operations.

127586000

Basis of Presentation Beginning in March 2011, the consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, JPR Royalty Sub LLC (“Royalty Sub”). Royalty Sub was formed in connection with a $30,000 financing transaction the Company completed on March 9, 2011. See Note 4, Royalty Monetization, for a further description of this transaction. All intercompany transactions and balances have been eliminated. The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial reporting and the instructions to Form 10-Q and do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Such financial statements reflect all adjustments that are, in management’s opinion, necessary to present fairly, in all material respects, the Company’s consolidated financial position, results of operations, and cash flows. There were no adjustments other than normal recurring adjustments. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2013 and the notes thereto included in the Company’s 2013 Annual Report on Form 10-K. Interim operating results are not necessarily indicative of operating results for the full year. The balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements included in the Company’s most recent Annual Report on Form 10-K.

30000000 Reclassifications In the first quarter of 2014, the Company changed its classification of legal costs associated with its patents. This change resulted in $242 and $639 of legal expenses being reclassified from research and development expense to general and administrative expense for the three and nine months ended September 30, 2013, respectively. This reclassification had no effect on previously reported total operating expenses or net loss amounts. 242000 639000

Cash and Cash Equivalents The Company generally considers cash equivalents to be all cash held in commercial checking accounts, money market accounts or investments in debt instruments with maturities of three months or less at the time of purchase. The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these items.

P3M

Restricted Cash Restricted cash as of September 30, 2014 represents cash the Company is required to maintain in an interest bearing certificate of deposit to serve as collateral for a corporate credit card program.

Investments The Company invests in high credit quality investments in accordance with its investment policy, which is designed to minimize the possibility of loss. The objective of the Company’s investment policy is to ensure the safety and preservation of invested funds, as well as maintaining liquidity sufficient to meet cash flow requirements. The Company places its excess cash with high credit quality financial institutions, commercial companies, and government agencies in order to limit the amount of its credit exposure. Per its policy, the Company is able to invest in marketable debt securities that may consist of U.S. Government and government agency securities, money market and mutual fund investments, municipal and corporate notes and bonds, commercial paper and asset or mortgage-backed securities, among others. The Company’s investment policy requires it to purchase high-quality marketable securities with a maximum individual maturity of three years and requires an average portfolio maturity of no more than 18 months. Some of the securities the Company invests in may have market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. To minimize this risk, the Company schedules its investments with maturities that coincide with expected cash flow needs, thus avoiding the need to redeem an investment prior to its maturity date. Accordingly, the Company does not believe it has a material exposure to interest rate risk arising from its investments. Generally, the Company’s investments are not collateralized. The Company has not realized any significant losses from its investments. The Company classifies all of its investments as available-for-sale. Unrealized gains and losses on investments are recognized in comprehensive income/(loss), unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations. The Company periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company believes the individual unrealized losses represent temporary declines primarily resulting from interest rate changes. Realized gains and losses are reflected in interest and other income in the Consolidated Statements of Comprehensive Loss and are determined using the specific identification method with transactions recorded on a settlement date basis. Investments with original maturities at date of purchase beyond three months and which mature at or less than 12 months from the balance sheet date are classified as current. Investments with a maturity beyond 12 months from the balance sheet date are classified as long-term. At September 30, 2014, the Company believes that the costs of its investments are recoverable in all material respects. The following tables summarize the fair value of the Company’s investments by type. The estimated fair value of the Company’s fixed income investments are classified as Level 2 in the fair value hierarchy as defined in U.S. GAAP. These fair values are obtained from independent pricing services which utilize Level 2 inputs. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="19" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> September 30, 2014 </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Amortized Cost </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Accrued Interest </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Gross Unrealized Gains </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Gross Unrealized Losses </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Estimated Fair Value </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 45%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Corporate debt securities </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,277 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,280 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Commercial paper </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 4,998 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 4,999 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total investments </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 6,275 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 6,279 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="19" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> December 31, 2013 </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Amortized Cost </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Accrued Interest </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Gross Unrealized Gains </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Gross Unrealized Losses </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Estimated Fair Value </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 45%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Obligations of U.S. Government and its agencies </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 4,899 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 4,901 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Corporate debt securities </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 8,528 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 47 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 8,576 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Commercial paper </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 5,994 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 5,996 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total investments </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 19,421 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 48 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 5 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 19,473 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table> The following table summarizes the scheduled maturity for the Company’s investments at September 30, 2014 and December 31, 2013. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2014 </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2013 </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 78%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Maturing in one year or less </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 5,977 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 16,891 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Maturing after one year through two years </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 302 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 2,582 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total investments </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 6,279 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 19,473 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table>

P3Y P18M P3M P12M P12M

Receivables Receivables are recorded for amounts due to the Company related to reimbursable research and development costs from the U.S. Department of Health and Human Services or royalty receivables from Shionogi & Co. Ltd. At September 30, 2014 and December 31, 2013, the Company had the following receivables. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="11" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> September 30, 2014 </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Billed </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Unbilled </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Total </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 67%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> U.S. Department of Health and Human Services </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 474 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 2,764 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 3,238 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Shionogi & Co. Ltd. </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total receivables </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 474 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2,764 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 3,238 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="11" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> December 31, 2013 </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Billed </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Unbilled </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Total </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 67%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> U.S. Department of Health and Human Services </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 90 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,573 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,663 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Shionogi & Co. Ltd. </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 452 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 452 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total receivables </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 542 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 1,573 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2,115 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table> Monthly invoices are submitted to the U.S. Department of Health and Human Services related to reimbursable research and development costs. The Company is also entitled to monthly reimbursement of indirect costs based on rates stipulated in the underlying contract. The Company’s calculations of its indirect cost rates are subject to audit by the federal government.

Patents and Licenses The Company seeks patent protection on internally developed processes and products. All patent related legal costs are expensed to general and administrative expenses when incurred as recoverability of such expenditures is uncertain

Accrued Expenses The Company generally enters into contractual agreements with third-party vendors who provide research and development, manufacturing, and other services in the ordinary course of business. Some of these contracts are subject to milestone-based invoicing and services are completed over an extended period of time. The Company records liabilities under these contractual commitments when it determines an obligation has been incurred, regardless of the timing of the invoice. This process involves reviewing open contracts and purchase orders, communicating with applicable Company personnel to identify services that have been performed on its behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of actual cost. The majority of service providers invoice the Company monthly in arrears for services performed. The Company makes estimates of accrued expenses as of each balance sheet date in its financial statements based on the facts and circumstances. The Company periodically confirms the accuracy of its estimates with the service providers and makes adjustments if necessary. Examples of estimated accrued expenses include: <table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 5%; padding-right: 0.8pt">   </td> <td style="width: 5%; padding-right: 0.8pt"> • </td> <td style="width: 90%; padding-right: 0.8pt"> fees paid to Clinical Research Organizations (“CROs”) in connection with preclinical and toxicology studies and clinical trials; </td> </tr> <tr style="vertical-align: top"> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt">   </td> </tr> <tr style="vertical-align: top"> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt"> • </td> <td style="padding-right: 0.8pt"> fees paid to investigative sites in connection with clinical trials; </td> </tr> <tr style="vertical-align: top"> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt">   </td> </tr> <tr style="vertical-align: top"> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt"> • </td> <td style="padding-right: 0.8pt"> fees paid to Contract Manufacturing Organizations (“CMOs”)  in connection with the production of our raw materials, drug substance and drug products; and </td> </tr> <tr style="vertical-align: top"> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt">   </td> </tr> <tr style="vertical-align: top"> <td style="padding-right: 0.8pt">   </td> <td style="padding-right: 0.8pt"> • </td> <td style="padding-right: 0.8pt"> professional fees. </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr> <td style="text-align: center; width: 100%"> 8 </td> </tr> </table> The Company bases its expenses related to clinical trials on its estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and clinical research organizations that conduct and manage clinical trials, including manufacturing drug substance, on the Company’s behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Accrued expenses as of September 30, 2014 and December 31, 2013 included $5,090 and $2,210, respectively, of research and development costs. 5090000 2210000

Income Taxes The liability method is used in the Company’s accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

Accumulated Other Comprehensive (Loss) Income Accumulated other comprehensive (loss) income is comprised of unrealized gains and losses on investments available-for-sale and is disclosed as a separate component of stockholders’ equity. No reclassifications out of accumulated other comprehensive (loss) income were recorded during the nine months ended September 30, 2014 and 2013.

Revenue Recognition The Company recognizes revenues from collaborative and other research and development arrangements and product sales. Revenue is realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the seller’s price to the buyer is fixed or determinable; and (iv) collectability is reasonably assured. Collaborative and Other Research and Development Arrangements and Royalties Revenue from license fees, royalty payments, milestone payments, and research and development fees is recognized as revenue when the earnings process is complete and the Company has no further continuing performance obligations or the Company has completed the performance obligations under the terms of the agreement. Fees received under licensing agreements that are related to future performance are deferred and recognized over an estimated period determined by management based on the terms of the agreement and the products licensed. In the event a license agreement contains multiple deliverables, the Company evaluates whether the deliverables are separate or combined units of accounting. Revisions to revenue or profit estimates as a result of changes in the estimated revenue period are recognized prospectively. Under certain of our license agreements, the Company receives royalty payments based upon our licensees’ net sales of covered products. The Company recognizes royalty revenues when it can reliably estimate such amounts and collectability is reasonably assured. Reimbursements received for direct out-of-pocket expenses related to research and development costs are recorded as revenue in the Consolidated Statements of Comprehensive Loss rather than as a reduction in expenses. Milestone payments are recognized as revenue upon the achievement of specified events if (1) the milestone is substantive in nature and the achievement of the event was not reasonably assured at the inception of the agreement and (2) the fees are non-refundable and non-creditable. Any milestone payments received prior to satisfying these criteria are recorded as deferred revenue. Under the Company’s contracts with the U.S. Department of Health and Human Services, specifically with the Biomedical Advanced Research and Development Authority (“BARDA/HHS”), and the National Institute of Allergy and Infectious Diseases (“NIAID/HHS”), revenue is recognized as reimbursable direct and indirect costs are incurred. The Company’s advanced development contract with BARDA/HHS for the development of peramivir expired on June 30, 2014 according to its terms. Product Sales Product sales are recognized net of estimated allowances, discounts, sales returns, chargebacks and rebates. The Company recorded the following revenues for the three and nine months ended September 30, 2014 and 2013: <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="7" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Three Months </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="7" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Nine Months </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2014 </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2013 </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2014 </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2013 </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 56%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Royalty revenue </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 5 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 8 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,951 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 2,042 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Collaborative and other research and development revenues: </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.5in"> U.S. Department of Health and Human Services </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 2,937 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 2,085 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 5,323 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 3,834 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.5in"> Shionogi (Japan) </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 296 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 296 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 888 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 888 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total revenues </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 3,238 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2,389 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 8,162 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 6,764 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table>

Research and Development Expenses The Company’s research and development costs are charged to expense when incurred. Research and development expenses include all direct and indirect development costs related to the development of the Company’s portfolio of product candidates. Advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as expense when the related goods are delivered or the related services are performed. Research and development expenses include, among other items, personnel costs, including salaries and benefits, manufacturing costs, clinical, regulatory, and toxicology services performed by CROs and CMOs, materials and supplies, and overhead allocations consisting of various administrative and facilities related costs. Most of the Company’s manufacturing and clinical and preclinical studies are performed by third-party CROs and CMOs. Costs for studies performed by CROs and CMOs are accrued by the Company over the service periods specified in the contracts and estimates are adjusted, if required, based upon the Company’s on-going review of the level of services actually performed. Additionally, the Company has license agreements with third parties, such as Albert Einstein College of Medicine of Yeshiva University (“AECOM”), Industrial Research, Ltd. (“IRL”), and the University of Alabama at Birmingham (“UAB”), which require fees related to sublicense agreements or maintenance fees. The Company expenses sublicense payments as incurred unless they are related to revenues that have been deferred, in which case the expenses are deferred and recognized over the related revenue recognition period. The Company expenses maintenance payments as incurred. Deferred collaboration expenses represent sub-license payments, paid to the Company’s academic partners upon receipt of consideration from various commercial partners, and other consideration paid to our academic partners for modification to existing license agreements. These deferred expenses would not have been incurred without receipt of such payments or modifications from the Company’s commercial partners and are being expensed in proportion to the related revenue being recognized. The Company believes that this accounting treatment appropriately matches expenses with the associated revenue.

Stock-Based Compensation All share-based payments, including grants of stock option awards and restricted stock unit awards, are recognized in the Company’s Consolidated Statements of Comprehensive Loss based on their fair values. The fair value of stock option awards is estimated using the Black-Scholes option pricing model. The fair value of restricted stock unit awards is based on the grant date closing price of the common stock. Stock-based compensation cost is recognized as expense on a straight-line basis over the requisite service period of the award. For stock option awards with performance conditions, the Company recognizes compensation expense at the time at which the underlying performance condition has been determined to have occurred.

Interest Expense and Deferred Financing Costs Interest expense for the three months and nine months ended September 30, 2014 and 2013 was $1,217 and $1,191, respectively, and $3,684 and $3,536, respectively, and relates to the issuance of the PhaRMA Notes (defined in Note 4). Costs directly associated with the issuance of the PhaRMA Notes have been capitalized and are included in other current assets on the Consolidated Balance Sheets. These costs are being amortized to interest expense over the term of the PhaRMA Notes using the effective interest rate method. Amortization of deferred financing costs included in interest expense was $110 for each of the three months ended September 30, 2014 and 2013, and $329 for each of the nine months ended September 30, 2014 and 2013.

110000

Currency Hedge Agreement In connection with the issuance by Royalty Sub of the PhaRMA Notes, the Company entered into a Currency Hedge Agreement (defined in Note 4) to hedge certain risks associated with changes in the value of the Japanese yen relative to the U.S. dollar. The Currency Hedge Agreement does not qualify for hedge accounting treatment; therefore, mark-to-market adjustments are recognized in the Company’s Consolidated Statements of Comprehensive Loss. Cumulative mark-to-market adjustments for the nine months ended September 2014 and 2013 resulted in gains of $732 and $3,168, respectively. Mark-to-market adjustments are determined by a third party pricing model that uses quoted prices in markets that are not actively traded and for which significant inputs are observable directly or indirectly, representing Level 2 in the fair value hierarchy as defined by U.S. GAAP. The Company is also required to post collateral in connection with the mark-to-market adjustments based on thresholds defined in the Currency Hedge Agreement. No hedge collateral was posted under the agreement as of September 30, 2014 and December 31, 2013.

732000

3168000

0 0

Net Loss Per Share Net loss per share is based upon the weighted average number of common shares outstanding during the period. Diluted loss per share is equivalent to basic net loss per share for all periods presented herein because common equivalent shares from unexercised stock options and common shares expected to be issued under the Company’s employee stock purchase plan were anti-dilutive. The calculation of diluted earnings per share for the three months ended September 30, 2014 and 2013 does not include 5,602 and 2,783, respectively, of such potential common shares, as their impact would be anti-dilutive. The calculation of diluted earnings per share for the nine months ended September 30, 2014 and 2013 does not include 5,288 and 1,731, respectively, of such potential common shares, as their impact would be anti-dilutive.

5602000

2783000

5288000

1731000

Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates.

Concentration of Market Risk The reimbursement of BCX4430 development expenses is a significant source of revenue and one which has an underlying cash flow stream. This revenue and cash flow is earned under a cost-plus-fixed-fee contract with NIAID/HHS. The Company relies on NIAID/HHS to reimburse predominantly all of the development costs for its BCX4430 program. Accordingly, reimbursement of these expenses represents a significant portion of the Company’s collaborative and other research and development revenues. The completion and/or termination of this program/collaboration could negatively impact the Company’s future Consolidated Statements of Comprehensive Loss and Cash Flows. In addition, the Company also recognizes royalty revenue from the net sales of RAPIACTA®; however, the underlying cash flow from these royalty payments goes directly to pay the interest, and then the principal, on the non-recourse notes payable. Payment of the interest and the ultimate repayment of principal of these notes will be entirely funded by future royalty payments derived from net sales of RAPIACTA. The RAPIACTA royalty stream from Shionogi & Co. Ltd, (“Shionogi”), the Company’s partner in Japan, was insufficient to pay the accrued interest in arrears on the non-recourse PhaRMA Notes by the September 1, 2014 payment date resulting in an event of default with respect to the PhaRMA Notes. Accordingly, the Company has classified the PhaRMA Notes and related accrued interest as current liabilities on its balance sheet as of September 30, 2014. As a result of the event of default, the holders of the PhaRMA Notes may pursue acceleration of the PhaRMA Notes, foreclose on the collateral securing the PhaRMA Notes and the Company’s equity interest in Royalty Sub and exercise other remedies available to them under the indenture in respect of the PhaRMA Notes. In such event, the Company may not realize the benefit of future royalty payments that might otherwise accrue to the Company following repayment of the PhaRMA Notes and it might otherwise be adversely affected. Due to the non-recourse nature of the PhaRMA Notes, in the event of any potential acceleration or foreclosure, the Company believes the primary impact to the Company would be the loss of future royalty payments from Shionogi and legal costs associated with retiring the PhaRMA Notes. In addition, the Company may incur costs associated with liquidating a related Currency Hedge Agreement, which would no longer be required in the event of foreclosure or if the PhaRMA Notes cease to be outstanding. As the PhaRMA Notes are obligations of Royalty Sub, the Company does not currently expect the event of default on the PhaRMA Notes to have a significant impact on the Company’s future results of operations or cash flows. The Company’s drug development activities are performed by a limited group of third party vendors. If any of these vendors were unable to perform their services, this could significantly impact the Company’s ability to complete its drug development activities.

Credit Risk Cash equivalents and investments are financial instruments which potentially subject the Company to concentration of risk to the extent recorded on the Consolidated Balance Sheets. The Company deposits excess cash with major financial institutions in the United States. Balances may exceed the amount of insurance provided on such deposits. The Company believes it has established guidelines for investment of its excess cash relative to diversification and maturities that maintain safety and liquidity. To minimize the exposure due to adverse shifts in interest rates, the Company maintains a portfolio of investments with an average maturity of approximately 18 months or less. The majority of the Company’s receivables are due from the U.S. Government, for which there is no assumed credit risk.

P18M

Recent Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-15 – Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which defines management’s responsibility to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued and to provide related footnote disclosures in certain circumstances. In connection with each annual and interim period, management must assess if there is substantial doubt about the company’s ability to continue as a going concern within one year after the issuance date.  Disclosures are required if conditions give rise to substantial doubt.  This standard is effective for all companies in the first annual period ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company does not expect this ASU will have a material impact on its consolidated financial statements. In May 2014, the FASB issued Accounting Standard Update ("ASU") 2014-09 – Revenue from Contracts with Customers, which provides a single, comprehensive revenue recognition model for all contracts with customers. The core principal of this ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is not permitted and companies can transition to the new standard under the full retrospective method or the modified retrospective method. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. In June 2014, the FASB issued ASU 2014-12 – Compensation – Stock Compensation: Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period, which provides explicit guidance for the accounting treatment for these types of awards. The ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. This update is effective for annual periods and interim periods within those annual periods beginning after December 15, 2014. Early adoption is permitted. The Company does not expect this ASU will have a material impact on its consolidated financial statements.

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="19" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> September 30, 2014 </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Amortized Cost </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Accrued Interest </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Gross Unrealized Gains </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Gross Unrealized Losses </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Estimated Fair Value </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 45%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Corporate debt securities </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,277 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,280 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Commercial paper </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 4,998 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 4,999 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total investments </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 6,275 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 6,279 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="19" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> December 31, 2013 </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Amortized Cost </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Accrued Interest </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Gross Unrealized Gains </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Gross Unrealized Losses </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Estimated Fair Value </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 45%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Obligations of U.S. Government and its agencies </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 4,899 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 4,901 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Corporate debt securities </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 8,528 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 47 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 8,576 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Commercial paper </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 5,994 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 2 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 5,996 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total investments </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 19,421 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 48 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 5 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 1 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 19,473 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table>

1277000

2000 1000

1280000

4998000

0 1000 0

4999000

6275000

2000 2000

6279000

4899000

1000 1000 0

4901000

8528000

47000 2000 1000

8576000

5994000

0 2000 0

5996000

19421000

48000 5000 1000

19473000

5977000

16891000

302000 2582000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="11" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> September 30, 2014 </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Billed </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Unbilled </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Total </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 67%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> U.S. Department of Health and Human Services </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 474 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 2,764 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 3,238 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Shionogi & Co. Ltd. </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total receivables </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 474 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2,764 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 3,238 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="11" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> December 31, 2013 </td> </tr> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Billed </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Unbilled </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Total </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 67%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> U.S. Department of Health and Human Services </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 90 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,573 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,663 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.25in"> Shionogi & Co. Ltd. </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 452 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 452 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Total receivables </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 542 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 1,573 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 2,115 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table>

474000

2764000

3238000

474000

2764000

90000

1573000

1663000

452000

542000

1573000

3238000

2389000

8162000

6764000

Note 2 — Stock-Based Compensation As of September 30, 2014, the Company had two stock-based employee compensation plans, the Stock Incentive Plan (“Incentive Plan”) and the Employee Stock Purchase Plan (“ESPP”), both which were amended and restated in March 2014 and approved by the Company’s stockholders in May 2014. Stock-based compensation expense of $6,550 ($6,388 of expense related to the Incentive Plan and $162 of expense related to the ESPP) was recognized during the first nine months of 2014, while $3,479 ($3,404 of expense related to the Incentive Plan and $75 of expense related to the ESPP) was recognized during the first nine months of 2013. There was approximately $10,770 of total unrecognized compensation cost related to non-vested stock option awards and restricted stock unit awards granted by the Company as of September 30, 2014. That cost is expected to be recognized as follows: $1,398 during the remainder of 2014, $3,940 in 2015, $2,807 in 2016, $2,340 in 2017 and $285 in 2018. In addition, the Company has outstanding performance-based stock options for which no compensation expense is recognized until achievement of the performance condition has been determined to have occurred. Stock Incentive Plan The Company grants stock option awards and restricted stock unit awards to its employees, directors, and consultants under the Incentive Plan. Under the Incentive Plan, stock option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Stock option awards granted to employees generally vest 25% each year until fully vested after four years. In January 2013, the Company made retention grants of stock option awards and restricted stock unit awards. These awards vest 50% each year until fully vested after two years. In August 2013, the Company issued 1,032 performance-based stock options that vest upon successful completion of specific development milestones. Following successful completion of the OPuS-1 clinical trial, 25% of the outstanding performance awards vested during the second quarter of 2014. As of September 30, 2014 and based on the information available at that time, 75% of the August 2013 performance awards remain unvested and no compensation expense has been recognized for this portion of the performance-based grant awards. Stock option awards granted to non-employee directors of the Company generally vest monthly over one year. All stock option awards have contractual terms of 5 to 10 years. The vesting exercise provisions of all awards granted under the Incentive Plan are subject to acceleration in the event of certain stockholder-approved transactions, or upon the occurrence of a change in control as defined in the Incentive Plan. Related activity under the Incentive Plan is as follows: <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Awards Available </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Options Outstanding </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> Weighted Average Exercise Price </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 67%; font-family: Times New Roman, Times, Serif; text-indent: -0.25in; padding-left: 0.25in"> Balance December 31, 2013 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 1,082 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 8,986 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 4.99 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.5in"> Plan amendment </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 3,750 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.5in"> Restricted stock unit awards granted </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> (593 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left"> ) </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.5in"> Restricted stock unit awards cancelled </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.5in"> Stock option awards granted </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> (614 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left"> ) </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 614 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 10.78 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.5in"> Stock option awards exercised </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> - </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> (1,165 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left"> ) </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 4.86 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.1pt; text-indent: -0.25in; padding-left: 0.5in"> Stock option awards cancelled </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> 88 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: right"> (88 </td> <td style="border-bottom: Black 1.1pt solid; font-family: Times New Roman, Times, Serif; text-align: left"> ) </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 1.1pt">   </td> <td style="padding-bottom: 1.1pt; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="padding-bottom: 1.1pt; font-family: Times New Roman, Times, Serif; text-align: right"> 8.83 </td> <td style="padding-bottom: 1.1pt; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt; text-indent: -0.25in; padding-left: 0.25in"> Balance September 30, 2014 </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 3,713 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: right"> 8,347 </td> <td style="border-bottom: Black 2.75pt double; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.75pt">   </td> <td style="padding-bottom: 2.75pt; font-family: Times New Roman, Times, Serif; text-align: left"> $ </td> <td style="padding-bottom: 2.75pt; font-family: Times New Roman, Times, Serif; text-align: right"> 5.39 </td> <td style="padding-bottom: 2.75pt; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> </table> For stock option awards granted under the Incentive Plan during the first nine months of 2014 and 2013, the fair value was estimated on the date of grant using a Black-Scholes option pricing model and the assumptions noted in the table below. The weighted average grant date fair value per share of the awards granted during the first nine months of 2014 and 2013 was $8.19 and $2.10, respectively. The fair value of the stock option awards is amortized to expense over the vesting periods using a straight-line expense attribution method. The following table summarizes the key assumptions used by the Company to value the stock option awards granted during the first nine months of 2014 and 2013. The expected life is based on the average of the assumption that all outstanding stock option awards will be exercised at full vesting and the assumption that all outstanding stock option awards will be exercised at the midpoint of the current date (if already vested) or at full vesting (if not yet vested) and the full contractual term. The expected volatility represents the historical volatility on the Company’s publicly traded common stock. The Company has assumed no expected dividend yield, as dividends have never been paid to stock or option holders and will not be paid for the foreseeable future. The weighted average risk-free interest rate is the implied yield currently available on zero-coupon government issues with a remaining term equal to the expected term. Weighted Average Assumptions for Stock Option Awards Granted to Employees and Directors under the Incentive Plan <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif"> <tr style="vertical-align: bottom"> <td>   </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2014 </td> <td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1.1pt">   </td> <td colspan="3" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid"> 2013 </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 78%; font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Expected Life in Years </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 5.5 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif">   </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="width: 8%; font-family: Times New Roman, Times, Serif; text-align: right"> 5.0 </td> <td style="width: 1%; font-family: Times New Roman, Times, Serif; text-align: left">   </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Expected Volatility </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 87 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left"> % </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 85 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left"> % </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Expected Dividend Yield </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 0.0 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left"> % </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 0.0 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left"> % </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Times New Roman, Times, Serif; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Risk-Free Interest Rate </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 1.6 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left"> % </td> <td style="font-family: Times New Roman, Times, Serif">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left">   </td> <td style="font-family: Times New Roman, Times, Serif; text-align: right"> 0.9 </td> <td style="font-family: Times New Roman, Times, Serif; text-align: left"> % </td> </tr> </table> Employee Stock Purchase Plan The Company has reserved a total of 1,475 shares of common stock to be purchased under the ESPP, of which 538 shares remain available for purchase at September 30, 2014. Eligible employees may authorize up to 15% of their salary to purchase common stock at the lower of 85% of the beginning or 85% of the ending price during six-month purchase intervals. No more than 3 shares may be purchased by any one employee at the six-month purchase dates and no employee may purchase stock having a fair market value at the commencement date of $25 or more in any one calendar year. The Company issued 49 shares during the first nine months of 2014 under the ESPP. Compensation expense for shares purchased under the ESPP related to the purchase discount and the “look-back” option were determined using a Black-Scholes option pricing model.

6550000

6388000

162000

3479000

3404000

75000

10770000

1398000 3940000 2807000 2340000 285000

0.25

P4Y

0.50

P2Y

1032000

0.25 0.75

P1Y

P5Y

P10Y

8.19

2.10

1475000

538000

0.15

0.85 0.85

3000

P6M 25000

49000

1082000

8986000

4.99

3750000

593000

614000

10.78

1165000

4.86

88000

8.83

3713000

8347000

5.39

P5Y6M

P5Y

0.87

0.85

0.000

0.016

0.009

Note 3 — Collaborative and Other Research and Development Contracts U.S. Department of Health and Human Services (“BARDA/HHS”). In January 2007, the U.S. Department of Health and Human Services (“BARDA/HHS”) awarded the Company a $102,661 contract for the advanced development of peramivir for the treatment of influenza. During 2009, peramivir clinical development shifted to focus on intravenous delivery and the treatment of hospitalized patients. To support this focus, a September 2009 contract modification was awarded to increase funding by $77,191. On February 24, 2011, the Company announced that BARDA/HHS had awarded it a $55,000 contract modification, intended to fund completion of the Phase 3 development of intravenous (“i.v.”) peramivir for the treatment of patients hospitalized with influenza. This contract modification brought the total award from BARDA/HHS to $234,852 and provided funding to support the filing of a new drug application (“NDA”) to seek regulatory approval for i.v. peramivir in the U.S. The contract expired on June 30, 2014 according to its terms. In December 2013, BioCryst submitted a NDA filing for i.v. peramivir to the U.S. Food & Drug Administration (“FDA”) seeking an indication as the first i.v. neuraminidase inhibitor approved in the U.S. for the treatment of acute uncomplicated influenza in adults. On February 24, 2014, the FDA notified the Company its NDA submission had been accepted for review. The FDA is expected to take action on the application by December 23, 2014. If approved, peramivir will be commercialized in the U.S. under the trade name RAPIVABTM. National Institute of Allergy and Infectious Diseases (“NIAID/HHS”). In September 2013, NIAID/HHS contracted with the Company for the development of BCX4430 as a treatment for Marburg, and subsequently, Ebola virus disease. NIAID/HHS, part of the National Institutes of Health, made an initial award of $5.0 million to the Company. The total funding under this contract could be up to $28.7 million, if all contract options are exercised by NIAID/HHS, over a five year period. The goals of this contract are to file initial new drug (“IND”) applications for i.v. and intramuscular (“i.m.”) BCX4430 for the treatment of Marburg and Ebola virus diseases, and to conduct an initial Phase 1 human clinical trial. The aggregate $28.7 million contract and option funding supports the appropriate IND-enabling program and the initial clinical trial. A total of $22.3 million has been awarded under exercised options within the contract. BCX4430 is the lead compound in the Company’s broad spectrum antiviral (“BSAV”) research program. The contract with NIAID/HHS is a cost-plus-fixed-fee contract. That is, the Company is entitled to receive reimbursement for all costs incurred in accordance with the contract’s provisions that are related to the development of BCX4430 plus a fixed fee, or profit. NIAID/HHS will make periodic assessments of progress, and the continuation of the contract is based on the Company’s performance, the timeliness and quality of deliverables, and other factors. The government has rights under certain contract clauses to terminate this contract. This contract is terminable by the government at any time for breach or without cause. Shionogi & Co., Ltd. (“Shionogi”). In March 2007, the Company entered into an exclusive license agreement with Shionogi to develop and commercialize peramivir in Japan for the treatment of seasonal and potentially life-threatening human influenza. Under the terms of the agreement, Shionogi obtained rights to injectable formulations of peramivir in Japan. The Company developed peramivir under a license from UAB and will owe sublicense payments to them on any future milestone payments and/or royalties received by the Company from Shionogi. In October 2008, the Company and Shionogi amended the license agreement to expand the territory covered by the agreement to include Taiwan and to provide rights for Shionogi to perform a Phase 3 clinical trial in Hong Kong. Shionogi has commercially launched peramivir under the commercial name RAPIACTA® in Japan.  Green Cross Corporation (“Green Cross”). In June 2006, the Company entered into an agreement with Green Cross to develop and commercialize peramivir in Korea. Under the terms of the agreement, Green Cross will be responsible for all development, regulatory, and commercialization costs in Korea. The license provides that the Company will share in profits resulting from the sale of peramivir in Korea, including the sale of peramivir to the Korean government for stockpiling purposes. Furthermore, Green Cross will pay the Company a premium over its cost to supply peramivir for development and any future marketing of peramivir products in Korea. Mundipharma International Holdings Limited (“Mundipharma”). In February 2006, the Company entered into an exclusive, royalty bearing right and license agreement with Mundipharma for the development and commercialization of forodesine, a Purine Nucleoside Phosphorylase (“PNP”) inhibitor, for use in oncology. Under the terms of the license agreement, as amended, Mundipharma obtained worldwide rights to forodesine.   Albert Einstein College of Medicine of Yeshiva University and Industrial Research, Ltd. (“AECOM” and “IRL” respectively). In June 2000, the Company licensed a series of potent inhibitors of PNP from AECOM and IRL, (collectively, the “Licensors”). The lead product candidates from this collaboration are forodesine and ulodesine. The Company has obtained worldwide exclusive rights to develop and ultimately distribute these, or any other, product candidates that might arise from research on these inhibitors. The Company has the option to expand its license agreement with the Licensors to include other inventions in the field made by the investigators or employees of the Licensors. The Company agreed to use commercially reasonable efforts to develop these drugs. In addition, the Company has agreed to pay certain milestone payments for each licensed product (which range in the aggregate from $1,400 to almost $4,000 per indication) for future development of these inhibitors, single digit royalties on net sales of any resulting product made by the Company, and to share approximately one quarter of future payments received from other third-party partners, if any. In addition, the Company has agreed to pay annual license fees, which can range from $150 to $500, that are creditable against actual royalties and other payments due to the Licensors. This agreement may be terminated by the Company at any time by giving 60 days advance notice or in the event of material uncured breach by the Licensors. In May 2010, the Company amended the license agreement through which the Company obtained worldwide exclusive rights to develop and ultimately distribute any product candidates that might arise from research on a series of PNP inhibitors, including forodesine and ulodesine. Under the terms of the amendment, the Licensors agreed to accept a reduction of one-half in the percentage of future payments received from third-party sub licensees of the licensed PNP inhibitors that must be paid to the Licensors. This reduction does not apply to (i) any milestone payments the Company may receive in the future under its license agreement with Mundipharma and (ii) royalties received from its sub licensees in connection with the sale of licensed products, for which the original payment rate will remain in effect. The rate of royalty payments to the Licensors based on net sales of any resulting product made by the Company remains unchanged. In consideration for these modifications in 2010, the Company issued to the Licensors shares of its common stock with an aggregate value of $5,911 and paid the Licensors $90 in cash. Additionally, at the Company’s sole option and subject to certain agreed upon conditions, any future non-royalty payments due to be paid by the Company to the Licensors under the license agreement may be made either in cash, in shares of the Company’s common stock, or in a combination of cash and shares. On November 17, 2011, the Company further amended its agreements with the Licensors whereby the Licensors agreed to accept a reduction of one-half in the percentage of Net Proceeds (as defined in the license agreement) received by the Company under its Amended and Restated Agreement with Mundipharma that will be paid to AECOM/IRL.   On June 19, 2012, the Company further amended its agreements with the Licensors whereby the parties clarified the definition of the field with respect to PNP inhibition and the Licensors agreed to grant an exclusive worldwide license of BCX4430 to BioCryst for any antiviral use. At its sole option and subject to certain agreed upon conditions, any future non-royalty payments due to be paid by the Company to the Licensors under the license agreement may be made either in cash, in shares of the Company’s common stock, or in a combination of cash and shares. The University of Alabama at Birmingham (“UAB”). The Company currently has agreements with UAB for influenza neuraminidase and complement inhibitors. Under the terms of these agreements, UAB performed specific research for the Company in return for research payments and license fees. UAB has granted the Company certain rights to any discoveries in these areas resulting from research developed by UAB or jointly developed with the Company. The Company has agreed to pay single digit royalties on sales of any resulting product and to share in future payments received from other third-party partners. The Company has completed the research under the UAB agreements. These two agreements have initial 25-year terms, are automatically renewable for five-year terms throughout the life of the last patent and are terminable by the Company upon three months’ notice and by UAB under certain circumstances. Upon termination both parties shall cease using the other parties’ proprietary and confidential information and materials, the parties shall jointly own joint inventions and UAB shall resume full ownership of all UAB licensed products. There is currently no activity between the Company and UAB on these agreements, but when the Company licenses this technology, such as in the case of the Shionogi and Green Cross agreements, or commercializes products related to these programs, the Company will owe sublicense fees or royalties on amounts it receives.

102661000 77191000 55000000 234852000 5000000 28700000 P5Y 22300000 1400000 4000000 150000 500000 P60D 5911000 90000 2 P25Y P5Y  Note 4 — Royalty Monetization Overview On March 9, 2011, the Company completed a $30,000 financing transaction to monetize certain future royalty and milestone payments under the Company’s license agreement with Shionogi (the “Shionogi Agreement”), pursuant to which Shionogi licensed from the Company the rights to market RAPIACTA® in Japan and, if approved for commercial sale, Taiwan. The Company received net proceeds of $22,691 from this transaction. As part of the transaction, the Company entered into a purchase and sale agreement dated as of March 9, 2011 with Royalty Sub, whereby the Company transferred to Royalty Sub, among other things, (i) its rights to receive certain royalty and milestone payments from Shionogi arising under the Shionogi Agreement, and (ii) the right to receive payments under a Japanese yen/US dollar foreign currency hedge arrangement (as further described below, the “Currency Hedge Agreement”) put into place by the Company in connection with the transaction. Royalty payments will be paid by Shionogi in Japanese yen and milestone payments will paid in U.S. dollars. The Company’s collaboration with Shionogi was not impacted as a result of this transaction. Non-Recourse Notes Payable On March 9, 2011, Royalty Sub completed a private placement to institutional investors of $30,000 in aggregate principal amount of its PhaRMA Senior Secured 14.0% Notes due 2020 (the “PhaRMA Notes”). The PhaRMA Notes were issued by Royalty Sub under an Indenture, dated as of March 9, 2011 (the “Indenture”), by and between Royalty Sub and U.S. Bank National Association, as Trustee. Principal and interest on the PhaRMA Notes issued are payable from, and are secured by, the rights to royalty and milestone payments under the Shionogi Agreement transferred by the Company to Royalty Sub and payments, if any, made to Royalty Sub under the Currency Hedge Agreement. The PhaRMA Notes bear interest at 14% per annum, payable annually in arrears on September 1st of each year (the “Payment Date”). The Company remains entitled to receive any royalties and milestone payments related to sales of peramivir by Shionogi following repayment by Royalty Sub of the PhaRMA Notes. Royalty Sub’s obligations to pay principal and interest on the PhaRMA Notes are obligations solely of Royalty Sub and are without recourse to any other person, including the Company, except to the extent of the Company’s pledge of its equity interests in Royalty Sub in support of the PhaRMA Notes. The Company may, but is not obligated to, make capital contributions to a capital account that may be used to redeem, or on up to one occasion pay any interest shortfall on, the PhaRMA Notes. In September 2013, Royalty Sub paid $1,844 of interest on the PhaRMA Notes from royalty payments received from RAPIACTA® sales from the preceding four calendar quarters. This payment resulted in an obligation shortfall of approximately $2,356 associated with accrued interest due September 3, 2013. As stipulated under the PhaRMA Notes Indenture, if the amount available for payment on any Payment Date is insufficient to pay all of the interest due on a Payment Date, the shortfall in interest will accrue interest at the interest rate applicable to the PhaRMA Notes compounded annually. Accordingly, commencing in September 2013, the Company began accruing interest at 14% per annum on the interest shortfall of $2,356. In March, June and August of 2014, Royalty Sub paid additional interest of $446, $1,882 and $70, respectively, bringing the shortfall down to $222 as of September 30, 2014. Under the terms of the Indenture, Royalty Sub’s inability to pay the full amount of interest payable in September 2013 by the next succeeding Payment Date for the PhaRMA Notes, which was September 1, 2014, constituted an event of default. Accordingly, the Company has classified the PhaRMA Notes and related accrued interest as current liabilities on its September 30, 2014 balance sheet. As a result of the event of default under the PhaRMA Notes, the holders of the PhaRMA Notes may pursue acceleration of the PhaRMA Notes, may foreclose on the collateral securing the PhaRMA Notes and the equity interest in Royalty Sub and exercise other remedies available to them under the Indenture in respect of the PhaRMA Notes. In such event, the Company may not realize the benefit of future royalty payments that might otherwise accrue to the Company following repayment of the PhaRMA Notes and it might otherwise be adversely affected. Due to the non-recourse nature of the PhaRMA Notes, in the event of any potential acceleration or foreclosure, the Company believes the primary impact to the Company would be the loss of future royalty payments from Shionogi and legal costs associated with retiring the PhaRMA Notes. In addition, the Company may incur costs associated with liquidating the related Currency Hedge Agreement, which would no longer be required in the event of foreclosure or if the PhaRMA Notes cease to be outstanding. As the PhaRMA Notes are the obligation of Royalty Sub, the Company does not currently expect the event of default on the PhaRMA Notes to have a significant impact on the Company’s future results of operations or cash flows. In addition to the 2013 interest shortfall, Royalty Sub was unable to make the 2014 interest payment of $4,200 on the September 1, 2014 Payment Date. Accordingly, commencing in September 2014, the Company began accruing interest at 14% per annum on the 2014 interest shortfall of $4,200. The Indenture does not contain any financial covenants. The Indenture includes customary representations and warranties of Royalty Sub, affirmative and negative covenants of Royalty Sub, Events of Default and related remedies, and provisions regarding the duties of the Trustee, indemnification of the Trustee, and other matters typical for indentures used in structured financings of this type. The PhaRMA Notes are redeemable at the option of Royalty Sub at any time at a redemption price equal to 100% of the outstanding principal balance of the PhaRMA Notes being redeemed, plus accrued and unpaid interest through the redemption date on the PhaRMA Notes being redeemed.  Foreign Currency Hedge In connection with the issuance by Royalty Sub of the PhaRMA Notes, the Company entered into a Currency Hedge Agreement to hedge certain risks associated with changes in the value of the Japanese yen relative to the U.S. dollar. Under the Currency Hedge Agreement, the Company has the right to purchase dollars and sell yen at a rate of 100 yen per dollar for which the Company may be required to pay a premium in each year from 2014 through 2020, provided the Currency Hedge Agreement remains in effect. A payment of $1,950 will be required if, on May 18 of the relevant year, the U.S. dollar is worth 100 yen or less as determined in accordance with the Currency Hedge Agreement. The Currency Hedge Agreement does not qualify for hedge accounting treatment; therefore, mark-to-market adjustments are recognized in the Company’s Consolidated Statement of Comprehensive Loss. Cumulative mark-to-market adjustments resulted in gains of $4,082 and $97 for the three months ended September 30, 2014 and 2013, respectively and gains of $732 and $3,168 for the nine months ended September 30, 2014 and 2013, respectively. The Company is also required to post collateral in connection with the mark-to-market adjustments based on defined thresholds. As of September 30, 2014, no collateral was posted under the Currency Hedge Agreement. The Company will not be required at any time to post collateral exceeding the maximum premium payments remaining payable under the Currency Hedge Agreement. The maximum amount of hedge collateral the Company would be required to post is $11,700. The Company is required to maintain a foreign currency hedge at 100 yen per dollar under the agreements governing the PhaRMA Notes. 22691000 30000000

0.140

1844000

2356000

446000

1882000

70000

222000 4200000 1.00 100

1950000

100

4082000

97000

0 11700000 100

Note 5 — Stockholders’ Equity In August 2013, the Company completed a public offering of 4,600 shares of its common stock at a price of $4.40 per share, which included the underwriters’ over-allotment allocation of an additional 600 shares. Net proceeds were approximately $18,500 after deducting underwriting discounts and offering expenses. In June 2014, the Company completed a public offering of 11,500 shares of its common stock at a price of $10.00 per share, which included the shares purchased pursuant to the underwriters’ option to purchase 1,500 shares. Net proceeds were approximately $106,600 after deducting underwriting discounts and offering expenses.

4600000

4.40

600000

18500000

11500000

10.00

1500000

106600000