Note 9 – Revenue Recognition, Collaboration Agreements and Other

BioNTech Research Collaboration

On April 8, 2022, the Company entered into the BioNTech Agreement to evaluate the combination of mRNA formats utilizing the Company’s proprietary LNC platform delivery technology. Under the terms of the BioNTech Agreement, the Company received an exclusivity fee in the amount of $2.75 million, and BioNTech SE will fund certain of the Company’s research expenses to be incurred under the agreement. The parties have also commenced discussions on a potential option to license (“OTL”) agreement for the Company’s LNC platform delivery technology. The term of the agreement begins on the effective date and ends on the earlier of the execution of an OTL agreement by the parties, 12-months after the effective date and termination of the agreement.

The Company assessed the BioNTech Agreement under ASC 808 Collaboration Arrangements and ASC 606 Revenue from Contracts with Customers (“ASC 606”) and concluded that the contract counterparty, BioNTech SE, is a customer based on the arrangement structure. The Company identified two material promises to deliver under the contract: (1) grant of an exclusive research license and (2) clinical research services. However, given the nature of the promises, the license and research services are not considered to be distinct from each other within the context of the contract. The Company therefore concluded that there is one combined performance obligation for both the license and research services.

The $2.75 million license fee was recorded as deferred revenue and is being recognized over the term of the contract performance obligation period, which the Company has concluded to be 12 months after the execution of the contract. The clinical research services are being invoiced as service revenue is earned on a monthly basis during the term of the contract.

As of September 30, 2022, the Company recognized approximately $2.1 million of contract research revenue from the BioNTech Agreement. For the three and nine months ended September 30, 2022, $688 thousand and $1.4 million of the contract research revenue was recognized from the license fee and $375 thousand and $750 thousand was earned from the monthly clinical research services performed by the Company. As of September 30, 2022, approximately $1.4 million of the license fee is included in deferred revenue within accrued expenses.

Cystic Fibrosis Foundation Therapeutics Development Award

On November 19, 2020, the Company entered into an award agreement (the “CFF Agreement”) with the Cystic Fibrosis Foundation (“CFF”), pursuant to which it received a Therapeutics Development Award of up to $4.2 million (the “Award”) (of which $484 thousand had been previously received) to support the preclinical development (the “Development Program”) of the Company’s MAT2501 product candidate. On November 19, 2021, the Company and CFF entered into an Amendment to the CFF Agreement which added an additional milestone payment in the amount of $321 thousand, which was received in the fourth quarter of 2021.

As of September 30, 2022, the Company has received approximately $3.6 million of the $4.5 million commitment, including the Amendment’s additional milestone payment, and a related deferred liability balance of $194 thousand and $899 thousand is included in accrued expenses at September 30, 2022 and December 31, 2021, respectively. The remainder of the Award will be paid to the Company upon the achievement of certain milestones related to progress of the Development Program, as set forth in the CFF Agreement.

Genentech Feasibility Study Agreement

On December 12, 2019, the Company entered into the Genentech Agreement which involves the development of oral formulations using the Company’s LNC platform delivery technology. Under the terms of the Genentech Agreement, Genentech paid the Company a total of $100 thousand for the development of three molecules, or $33 thousand per molecule, which is being recognized upon the Company fulfilling its obligations for each molecule under the Genentech Agreement. The Company recorded the upfront consideration as deferred revenue, which is included in accrued expenses on the consolidated balance sheets. As of December 31, 2021, the Company completed its obligations related to the first and second of the three molecules. During the three and nine months ended September 30, 2022, the Company did not complete its obligations related to the remaining molecule but expects to do so by December 31, 2022.