7. Related-Party Transactions

Upon the Company’s IPO, Celgene’s ownership of the Company’s outstanding equity interest decreased to less than 10%. As a result, starting October 1, 2018, the Company ceased to reflect balances and transactions associated with Celgene as a related party in its financial statements. Transactions with Celgene for the three months ended March 31, 2019 and 2018, respectively, are described in Note 5.    

Related party transactions with Merck, which owned 11.9% of the Company’s outstanding equity interest both as of March 31, 2019 and December 31, 2018, are described in Note 5.      

Three directors of the Company have performed consulting services for the Company, which consulting services were terminated prior to the Company’s IPO in September 2018.  During the three months ended March 31, 2019, the Company made no payment to these three directors relating to consulting services.  During the three months ended March 31, 2018, the Company paid $15,000, $7,500 and $7,500, respectively, to these three directors relating to their consulting services.  

Investment in SutroVax, Inc. (“SutroVax”)

In December 2013, the Company and Johnson & Johnson Innovation, through the Johnson & Johnson Development Corporation, provided initial co-funding for a new company, SutroVax. SutroVax leverages the Company’s proprietary integrated cell-free protein synthesis platform, XpressCF™, to develop novel vaccines for a broad range of disease targets. The Company had $0.3 million and $49,000 in receivables due from SutroVax as of March 31, 2019 and December 31, 2018, respectively, which were included in accounts receivable on the condensed balance sheet.

As of both March 31, 2019 and December 31, 2018, the Company held a 5.6% common stock ownership interest in SutroVax, respectively, on a fully-diluted basis, with a carrying value of $0 and was accounted for under the cost method.

SutroVax qualifies as a variable interest entity. However, the Company maintains only shared power to direct the activities that most significantly impact the performance of SutroVax. Therefore, the Company is not considered the primary beneficiary and consolidation is not required.

See Note 5, SutroVax, Inc. Supply Agreement for discussion of the supply arrangement entered into with SutroVax in May 2018 and related revenue recognized for the three months ended March 31, 2019.