We and Lilly also entered into a convertible
note agreement on December 11, 2018, which became effective on January 23, 2019. As the convertible note was not effective as of
December 31, 2018, there is no corresponding recognition in our financial statements. The convertible note is a senior unsecured
obligation that bears interest at a rate of 0.75% per annum, which may be paid in cash or result in the accretion of the principal
amount thereof, at our election. Subject to the terms and conditions set forth in the convertible note agreement, the convertible
note will automatically convert into the Company’s common shares on the 90th day after the effective date of the license
agreement, at a conversion price equal to USD 13.83 per share.
Michael J. Fox Foundation for Parkinson’s
In 2015, we were awarded an important grant
from the Michael J. Fox Foundation for Parkinson’s Research (MJFF). The grant is funding the development of a diagnostic
imaging agent capable of detecting PD at an early stage. The project focuses on alpha-synuclein PET tracers. We have identified
molecules from our Morphomer library that stain selectively alpha-synuclein pathological structures in human PD brain sections.
We are optimizing the potency, selectivity and pharmacokinetics of these tracers and expect to select a lead candidate. We were
awarded a one year continuation of this grant in September 2017 for activities scheduled through September 2018. In November 2018,
we were awarded a follow-up grant to facilitate the execution of a first-in-human study for a potential alpha-synuclein PET tracer
with the current lead compound. The study will commence in H1 2019.
Critical Accounting Policies and Significant Judgments and
In May 2014, the International Accounting
Standards Board (IASB) issued IFRS 15 – Revenue from Contracts with Customers which amends the guidance
for accounting for revenues from contracts with customers. This IFRS replaces all current revenue standards in IFRS including IAS
11 – Construction Contracts, IAS 18 – Revenue and various interpretations. The Company
adopted this new standard on January 1, 2018, and would have recognized the cumulative effect of initially applying the new revenue
standard as an adjustment to the opening balance of accumulated losses; however, the Company did not deem any adjustments required
in the transition to the new standard.
This standard applies to all contracts
with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements
and financial instruments. Under IFRS 15, an entity recognizes revenue when its customer obtains control of promised goods
or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.
To determine revenue recognition for arrangements that an entity determines are within the scope of IFRS 15, the entity performs
the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract;
(iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and
(v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model
to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or
services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of IFRS
15, we assess the goods or services promised within each contract and identify, as a performance obligation, and assess whether
each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to
the respective performance obligation when (or as) the performance obligation is satisfied.
The Company enters into licensing agreements
which are within the scope of IFRS 15, under which it licenses certain rights to its product candidates and intellectual property
to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable,
up-front license fees; development, regulatory and/or commercial milestone payments; payments for research and clinical services
the Company provides through either its full-time employees or third-party vendors; and royalties on net sales of licensed products
commercialized from the Company’s intellectual property. Each of these payments results in license, collaboration and other
revenues, which are classified as contract revenue on the statements of loss, except for revenues from royalties on net sales of
products commercialized from the Company’s intellectual property, which are classified as royalty revenues.