Table of Contents
Notes to Consolidated Financial Statements (Continued)
5. Collaboration and License Agreements (Continued)
received from its sublicense of the licensed technology at percentages between low-double digits and low-teens (see Note 20).
rights granted to the Company under the Nationwide License represent distinct components that need to be combined with other licensed intellectual property and know how in order to
complete the clinical development of AVXS-101 and have no alternative future use. Additionally, the Company did not acquire any employees in connection with the Nationwide License. As a result of the
above, and the early-stage nature of the licensed technology, the Company concluded that the acquired rights did not meet the definition of a business, and therefore the Company accounted for the
Nationwide License as an asset acquisition and expensed such amounts as research and development expense.
Company recognized research and development expense of $345,447 in its consolidated financial statements for the year ended December 31, 2013, representing the fair value of
the Up-front Shares issued to NCH as of the Effective Date. Since NCH can require the Company to repurchase the Up-front Shares upon exercise of the Royalty Option, the fair value of the Up-front
Shares as of the Effective Date of the Nationwide License is reflected as redeemable common stock on the Company's consolidated balance sheet as of December 31, 2013, 2014 and
September 30, 2015 (unaudited).
addition to the above, the Nationwide License granted NCH anti-dilution protection on its 3% equity ownership of the Company's outstanding capital stock on a fully-diluted basis
until such time that the Company achieved a $50,000,000 market capitalization, and required that the Company file a registration statement for an initial public offering of its common stock
within ninety days of the Effective Date. Failure to do so would constitute a material breach of the agreement and would allow NCH to terminate the Nationwide License.
January 13, 2014, the Nationwide License was amended to delay the requirement to file a registration statement to within 30 calendar days of NCH providing written
notice to the Company that NCH had dosed the seventh patient in the Phase 1 clinical trial, and the anti-dilution protection afforded to NCH was extended until such time as the Company achieved
a $100,000,000 market capitalization. In consideration for this amendment the Company agreed to pay to NCH an aggregate of $50,000, with $20,000 payable on the amendment date, and three $10,000
payments payable within ten days of the dosing of each of the first, second and fourth patients in the Phase 1 clinical trial. Such amount is included in research and development expense for
the year ended December 31, 2014.
August 2014, the Company issued an additional 86,725 common shares to NCH pursuant to the anti-dilution provisions of the Nationwide License. The Company recognized additional
research and development expense of $214,298, in its consolidated financial statements for the year ended December 31, 2014, representing the fair value of the additional common shares that
March 2015 (unaudited), the Company issued an additional 34,463 common shares to NCH, and in May 2015 (unaudited), the Company issued an additional 3,802 common shares to NCH in each
case pursuant to the anti-dilution provisions of the Nationwide License. The Company recognized additional research and development expense of $473,164 in its consolidated financial statements for the
nine months ended September 30, 2015 (unaudited), representing the fair value