24. Deferred income

Deferred income (long term and short term) amounted to €219.9 million at 31 December 2017 and decreased by €65.7 million compared to €285.6 million as at 31 December 2016. The outstanding deferred income balance at 31 December 2017 included €214.0 million related to filgotinib (€93.5 million classified as non-current deferred income), €5.4 million deferred income related to the license fee of Servier (€3.8 million classified as non-current deferred income) and €0.5 million deferred grant income.

On the one hand we had per 31 December 2015 a deferred income of €39 million due to the recognition of a deferred income upon signing of the share subscription agreement with Gilead (see note 8). On the other hand we received in January 2016 an upfront payment from Gilead for an amount of $300 million (or €276 million). The global collaboration with Gilead foresees continuous involvement from us, since we will perform certain R&D activities in the development phase of the filgotinib program; therefore, management assessed that both items of deferred income should be spread in function of the costs incurred for this program, applying the percentage of completion method. For the year ended 31 December 2017, €71.3 million were recognized in revenue (2016: €29.2 million), of which €8.8 million were related to the deferred income from the share subscription agreement and €62.5 million were related to the upfront payment.

In the third quarter of the year ended 31 December 2017, a license fee of €6.0 million was received from Servier in the scope of our collaboration agreement in the field of osteoarthritis, of which €0.6 million was recognized in revenue at the end of the year 2017. This deferred income will be recognized on a straight-line basis over the next phase of development, which is our estimated period of involvement.