Annual report pursuant to Section 13 and 15(d)

Revenue Recognition, Collaboration Agreements, and Other Research and Development Agreements

Revenue Recognition, Collaboration Agreements, and Other Research and Development Agreements
12 Months Ended
Dec. 31, 2022
Research and Development [Abstract]  
Revenue Recognition, Collaboration Agreements, and Other Research and Development Agreements

Note 9 – Revenue Recognition, Collaboration Agreements, and Other Research and Development Agreements


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. Under the terms of the BioNTech Agreement, the Company received an exclusivity fee in the amount of $2,750, 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. 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. As of December 31, 2022, the parties have not executed an OTL 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 $2,750 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 December 31, 2022, the Company recognized $3,188 of contract research revenue from the BioNTech Agreement. For the year ended December 31, 2022 $2,063 of the contract research revenue was recognized from the license fee and $1,125 was earned from the monthly clinical research services performed by the Company. As of December 31, 2022, $688 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 $4,234 (the “Award”) (of which $484 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.


As of December 31, 2022, the Company has received $3,635 of the $4,555 commitment, inclusive of the Amendment’s additional milestone payment, and the related deferred liability balances of $88 and $899 is included in accrued expenses at December 31, 2022 and December 31, 2021, respectively. During the fourth quarter of 2022, for financial and technical reasons, the Company determined that it was not commercially reasonable to continue the development of MAT2501 and instead elected to focus existing resources on other initiatives. As a result, the Company does not anticipate receiving the balance of the commitment.


Pursuant to the terms of the CFF Agreement, should the Company ceases to use commercially reasonable efforts directed to the development of MAT2501 in the Field, (an “Interruption”) and fail to resume the development of the Product after receiving from CFF notice of an Interruption, then the Company must either repay the amount of the Award actually received by the Company, or grant to CFF (1) an exclusive (even as to the Company), worldwide, perpetual, sublicensable license under technology developed under the Agreement that covers the Product for use in treating infections in CF patients (the “CF Field”), and (2) a non-exclusive, worldwide license under certain background intellectual property covering the Product, to the extent necessary to commercialize the Product in the CF Field. Following discussion with the CFF in early 2023, the Company does not believe it will have to repay any amounts of Awards received by the Company to date pursuant to the terms of the CFF Agreement. The Company is working together with the CFF to wind up the agreement according to its terms.


In the event that the Company chooses to resume development of MAT2501, pursuant to the terms of the Agreement, the Company is obligated to make royalty payments to CFF contingent upon commercialization of the Product in the Field up to a maximum of five times the Award or approximately $21.2 million (the “Royalty Cap”), payable in three equal annual installments following the first commercial sale of the Product, the first of which is due within 90 days following the first commercial sale of the Product. The Company may also be obligated to make a payment to CFF if the Company transfers, sells or licenses the Product in the CF Field, or if the Company enters into a change of control transaction which will be applied against the Royalty Cap. In addition, the Company is also obligated to make up to two royalty payments to CFF of approximately $4.2 million each, due in the calendar years in which specific net sales milestones are achieved.


The term of the Agreement commenced on November 19, 2020 and expires on the earlier of the date on which the Company has paid CFF all of the fixed royalty payments set forth therein, the effective date of any license granted to CFF following an Interruption, or upon earlier termination of the Agreement. Either CFF or the Company may terminate the agreement for cause, which includes the Company’s material failure to achieve certain development milestones. The Company’s payment obligations survive the termination of the Agreement.


The Company concluded that the CFF award is in the scope of ASC 808. Accordingly, as discussed in Note 3, the award amounts received from CFF upon achievement of certain milestones are recognized as credits to research and development expenses in the period the Development Program’s expenses are incurred. During the years ended December 31, 2022 and 2021, the Company recognized $811 and $2,179, respectively, as credits to research and development expenses related to the CFF award.



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. Under the terms of the Genentech Agreement, Genentech paid the Company a total of $100 for the development of three molecules, or approximately $33 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 year ended December 31, 2022, the Company did not complete its obligations related to the remaining molecule but expects to do so during 2023.


License Agreement


Through the acquisition of Aquarius, the Company acquired a license from Rutgers University, The State University of New Jersey (successor in interest to the University of Medicine and Dentistry of New Jersey) for certain patents related to the LNC Platform (the “License Agreement”). The Second Amended and Restated Exclusive License Agreement provides for, among other things, the payment of (1) royalties on a tiered basis between low single digits and the mid-single digits of net sales of products using such licensed technology, (2) a one-time sales milestone fee of $100 when and if sales of products using the licensed technology reach the specified sales threshold and (3) an annual license fee of $50 over the term of the License Agreement. The term of the License Agreement will remain in effect until the expiration of the last-to-expire patent rights licensed or seven and one-half years from the date of the first commercial sale of a licensed product under this agreement, whichever is later.