8. Licenses and Collaborations

Merck Sharp & Dohme Corp.

On January 2, 2019, the Company entered into an Exclusive License and Research Collaboration Agreement (the “Collaboration Agreement”) with Merck Sharp & Dohme Corp. (“Merck”) to discover and develop certain proprietary influenza A/B antiviral agents. Under the terms of the Collaboration Agreement, Merck agreed to fund research and development for the program, including clinical development, and will be responsible for worldwide commercialization of any products derived from the collaboration. Cocrystal received an upfront payment of $4 million and was eligible to receive payments related to designated development, regulatory and sales milestones with the potential to earn up to $156,000,000, as well as royalties on product sales. Merck can terminate the Collaboration Agreement at any time prior to the first commercial sale of the first product developed under the Collaboration Agreement, in its sole discretion, without cause.

On December 15, 2023, the Company received written notice from Merck of Merck’s election to terminate the Exclusive License and Collaboration Agreement. The termination of the Agreement was effective on March 14, 2024. According to Merck’s termination notice, Merck determined there were no existing conditions to continue the collaboration. The termination resulted from the inability to develop the compounds to meet a specific aspect of Merck’s program. The pending patent applications on compounds covered by the Agreement and previously filed by Merck on behalf of both companies remain in place.

Kansas State University Research Foundation

Cocrystal entered into two License Agreement with Kansas State University Research Foundation (the “Foundation”) on February 18, 2020 to further develop certain proprietary broad-spectrum antiviral compounds for the treatment of norovirus and coronavirus infections.

On February 28, 2024, the Company provided notice to the Foundation of the Company’s election to terminate the 2020 License Agreements. The terminations, which were made due to the Company’s determination that further development efforts under the License Agreements would be futile, took effect on March 29, 2024.

Phase 2a Clinical Trial

In August, 2022, the Company engaged hVIVO, a subsidiary of London-based Open Orphan plc (AIM: ORPH), a contract research organization (CRO), to conduct a Phase 2a clinical trial (the “Study”) with the Company’s novel, broad-spectrum, orally administered antiviral influenza candidate. The Company paid a reservation fee of $1.7 million upon execution of the Start-Up Agreement (the “Agreement”) for the Study. The Company recognized the reservation fee as prepaid asset on its balance sheet at December 31, 2022. In September 2023, the Clinical Trial Agreement (“CTA”) was executed by the Company and hVIVO, which superseded the Agreement, including the terms attributable to the reservation fee. Under the terms of the CTA, total budget of the Study was approximately $6.8 million, which consisted of the reservation fee of $1.7 million and additional milestone payments totaling approximately $5.1 million. The reduction of the reservation fee and the milestone payments will become due during the length of the CTA as milestones are realized.

During the year ended December 31, 2024 and 2023, upon achievement of certain milestones, the reservation fee was reduced by approximately $1.28 million and $0.4 million, respectively, which was recognized as expense during the year then ended. As a result, there was no balance of the reservation fee included in prepaid expenses as of December 31, 2024. Pursuant to the CTA, additional milestones payments became due during the year ended December 31, 2024 and 2023, resulting in the recognition during the year of aggregate expenses of $2.2 million and $3.05 million, respectively. As of December 31, 2024, $0.5 million was due on the CTA which is included in accounts payable and accrued expenses in the accompanying consolidated balance sheet.