Table of Contents
Notes to Consolidated Financial Statements (Continued)
5. Collaboration and License Agreements
Nationwide Children's Hospital
In October 2013 (the "Effective Date"), the Company entered into an Exclusive License Agreement (the "Nationwide License"), which
agreement was amended and restated in its entirety in January 2016 (see Note 20), with Nationwide Children's Hospital ("NCH"). Under the terms of the agreement, NCH granted the Company an exclusive,
non-transferable, worldwide license to certain patents held by NCH for the therapy and treatment of SMA. The Company was also provided a license to the Investigational New Drug application ("IND") for
AVXS-101 (the "Product Candidate") and was provided the right to become sponsor of the IND after completion of the Phase 1 clinical trial. On October 14, 2015 (unaudited), the Company
exercised the option and, as of November 6, 2015, the Company became the sponsor of the IND. Additionally, the Company was provided the U.S. marketing rights to the product upon receipt of
Company is responsible for all clinical trial costs incurred by NCH that are not covered by third party research grants and the Company committed to spend not less than $9,400,000
for the development of the Product Candidate during the first eight years of the Nationwide License (see Note 20).
incurred by NCH and reimbursed by the Company for the years ended December 31, 2013 and 2014 and the nine months ended September 30, 2014 and 2015 (unaudited) were
$7,560, $341,482, $159,474 and $366,602, respectively and are included in research and development expense in the consolidated statements of operations. Aggregate development costs, as defined in the
Nationwide License, incurred by the Company through December 31, 2014 and September 30,
2015 (unaudited) were $3,049,491 and $6,097,934, respectively and serve to reduce the remaining committed contractual spend under the Nationwide License.
As consideration for the Nationwide License, on the Effective Date, the Company agreed to issue 331,053 shares of its common stock to NCH (the "Up-front Shares"), which represented 3%
of the Company's outstanding capital stock on a fully-diluted basis. Additionally, the Company agreed to make certain future milestone payments totaling $125,000 upon achievement of certain regulatory
milestones and agreed to reimburse NCH, upon the successful completion of an additional financing round, the amount of $83,163 to cover past patent costs and expenses incurred by NCH prior to the
Effective Date. These patent reimbursement costs are included in research and development expense for the year ended December 31, 2014.
The Nationwide License provides that for the 30 day period immediately following FDA approval of the Biologics License Application ("BLA"), NCH shall have the option (if it owns
at least 50% of the shares issued to it pursuant to the agreement) to sell all, but not less than all, of the Up-front Shares back to the Company at a per share price equal to two times the price per
share of preferred stock sold by the Company in its Class B Financing ($2.47 per share), with such consideration to be paid by the Company in four equal quarterly installments (the "Royalty
Option") (see Note 20).
the Royalty Option is exercised, the Company shall pay a low single digit royalty on net sales, if any, of the Product Candidate during the term of the Nationwide License, subject to
certain annual minimums (see Note 20). In addition, the Company must pay NCH a portion of sublicensing