Table of Contents
Notes to Consolidated Financial Statements (Continued)
5. Collaboration and License Agreements (Continued)
2015, 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 regulatory approval.
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 21).
incurred by NCH and reimbursed by the Company for the years ended December 31, 2015, 2014 and 2013 were $570,299, $341,482 and $7,560, 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,
2015 and 2014 were $9,890,947 and $3,049,491, respectively and achieve the committed contractual spend under the Nationwide License.
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.
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 21).
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 21). In addition, the Company must pay NCH a portion of sublicensing revenue received from its sublicense of the licensed technology at percentages between
low-double digits and low-teens (see Note 21).
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