On April 20, 2015, the Company entered into an award agreement with the CFFT, a non-profit drug discovery and development affiliate of the Cystic Fibrosis Foundation, pursuant to which it received a development award (the “Award”) for up to $5 million in funding. The funding from the Award supported a first-in-patient Phase 2 clinical trial of the Company’s oral anti-inflammatory drug anabasum in adults with cystic fibrosis (“CF”). The Company has billed and received $5.0 million in payments since the inception of the Award as outlined below. The payments received under the award were recorded as deferred revenue when the triggering event to receive those amounts has occurred and were amortized on a straight-line basis over the expected duration of the remaining performance period under the Award which concluded in the third quarter of 2017.

Upon the execution of the Award agreement, the Company received a payment of $1,250,000 in May 2015. In November 2015, the Company received a second payment of $1,250,000 upon the achievement of a milestone for dosing the first patient. In August 2016, the Company received a third payment from the CFFT in the amount of $1,000,000 for achieving a milestone in July 2016 related to dosing the median clinical trial patient. In January 2017, the Company received a fourth payment from the CFFT in the amount of $1,000,000 for achieving a milestone in December 2016 related to completing the final visit for the final patient, which was billed by the Company to CFFT in December 2016 and was classified in grants receivable as of December 31, 2016. The Company achieved the final milestone in September 2017 related to the issuance to CFFT of the final integrated statistical report related to the Phase 2 CF clinical trial. At that time the Company had completed all its performance obligations under the contract and therefore the performance period had concluded. The final milestone amount of $500,000 was billed by the Company to CFFT in September 2017 and was classified in grants receivable as of September 30, 2017. The Company received the $500,000 milestone payment under the Award from CFFT in November 2017.

Pursuant to the terms of the Award agreement, the Company is obligated to make royalty payments to CFFT contingent upon commercialization of anabasum in the Field of Use (as defined in the Award agreement) as follows: (i) a royalty payment equal to five times the amount the Company receives under the Award agreement, up to $25 million, payable in three equal annual installments following the first commercial sale of anabasum, the first of which is due within 90 days following the first commercial sale of anabasum, (ii) a royalty payment to CFFT equal to the amount the Company receives under the Award agreement, up to $5 million, due in the first calendar year in which the aggregate cumulative net sales of anabasum in the Field of Use exceed $500 million, and (iii) royalty payment(s) to CFFT of up to approximately $15 million if the Company transfers, sells or licenses anabasum in the Field of Use other than for certain clinical or development purposes, or if the Company enters into a change of control transaction, with such payment(s) to be credited against the royalty payments due upon commercialization. The Field of Use is defined in the Award as the treatment in humans of CF, asbestosis, bronchiectasis, byssinosis, chronic bronchitis/COPD hypersensitivity pneumonitis, pneumoconiosis, primary ciliary dyskinesis, sarcoidosis and silicosis. Either CFFT or the Company may terminate the agreement for cause, which includes the Company’s material failure to achieve certain commercialization and development milestones. The Company’s payment obligations, if any, would survive the termination of the Award agreement. For the three months ended September 30, 2017 and 2016, the Company recognized revenue in respect of this collaboration of $796,312 and $742,558, respectively. For the nine months ended September 30, 2017 and 2016, the Company recorded revenue of $2,440,195 and $1,535,754, respectively. Deferred revenue consists of the following: