Table of Contents
AveXis, Inc.
Notes to Consolidated Financial Statements (Continued)
2. Summary of Significant Accounting Policies (Continued)
To
date, the Company has not generated any revenues from the commercial sale of its gene therapy product candidate.
Research and Development Costs
Research and development costs are expensed as incurred. Research and development expenses are comprised of costs incurred in
performing research and development activities, including salaries, stock-based compensation and benefits, third party license fees, and external costs of outside vendors engaged to conduct
preclinical development activities and clinical trials.
Upfront
and milestone payments made to third parties who perform research and development services on the Company's behalf are expensed as services are rendered or when they no longer
have alternative future use. Costs incurred in obtaining technology licenses are charged to research and development expense as acquired in-process research and development if the technology licensed
has not reached technological feasibility and has no alternative future use.
Patent Costs
All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the
uncertainty about the recovery of the expenditure. Amounts incurred totaled $0, $83,163 and $7,430 (unaudited) for the years ended December 31, 2013 and 2014 and the nine months ended
September 30, 2015, respectively, and are classified as research and development expenses.
Stock-Based Compensation
The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation — Stock
Compensation ("ASC 718"). ASC 718 requires all stock-based payments to employees, including grants of employee
stock options, to be recognized in the consolidated statements of operations based on their fair values.
The
Company's stock-based awards are subject to either service or performance-based vesting conditions. Compensation expense related to awards to employees with only service-based
vesting conditions is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards (the
"Graded Vesting Attribution Method"), based on the estimated grant date fair value for each separately vesting tranche. Compensation expense related to awards to non-employees with only service-based
vesting conditions is recognized based on the then-current fair value at each financial reporting date prior to the measurement date over the associated service period of the award, which is generally
the vesting term, using the Graded Vesting Attribution Method. Compensation expense related to awards to employees with only performance-based vesting conditions is recognized based on the estimated
grant date fair value over the requisite service period using the Graded Vesting Attribution Method to the extent achievement of the performance condition is probable. Compensation expense related to
awards to non-employees only with performance-based vesting conditions is recognized based on the then-current fair value at each financial reporting date prior to the measurement date over the
requisite service period using the Graded Vesting Attribution Method to the extent achievement of the performance condition is probable.
F-13
