they are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of
such milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such
adjustments recorded would affect contract revenues and earnings in the period of adjustment.
Research and Development Services
The Company has certain arrangements with
our collaboration partners that include contracting our full-time employees for research and development programs. The Company
assesses if these services are considered distinct in the context of each contract and, if so, they are accounted for as separate
performance obligations. These revenues are recorded in contract revenue as the services are performed.
The Company receives
payments and determines credit terms from its customers for its various performance obligations based on billing schedules established
in each contract. The timing of revenue recognition, billings and cash collections results in billed other current receivables,
accrued income (contract assets), and deferred income (contract liabilities) on the balance sheets. Amounts are recorded as other
current receivables when the Company’s right to consideration is unconditional. The Company does not assess whether a contract
has a significant financing component if the expectation at contract inception is such that the period between payment by the licensees
and the transfer of the promised goods or services to the licensees will be one year or less.
Research and development expenditure
Given the stage of development of the Company’s
products, all research expenditure is recognized as expense when incurred. Research and development expenditures include:
|·||the cost of acquiring, developing and manufacturing active pharmaceutical ingredients for product candidates that have not
received regulatory approval, clinical trial materials and other research and development materials;|
|·||fees and expenses incurred under agreements with contract research organizations, investigative sites, and other entities in
connection with the conduct of clinical trials and preclinical studies and related services, such as administrative, data management,
and laboratory services;|
|·||fees and costs related to regulatory filings and activities;|
|·||costs associated with pre-clinical and clinical activities; and|
|·||employee-related expenses, including salaries and bonuses, benefits, travel and stock-based compensation expense|
For external research contracts, expenses
include those associated with contract research organizations, or CROs. The invoicing from CROs for services rendered do not always
align with work performed. We accrue the cost of services rendered in connection with CRO activities based on our estimate of the
“stage of completion” for such contracted services. We maintain regular communication with our CRO vendors to gauge
the reasonableness of our estimates and accrue expenses as of the balance sheet date in the financial statement based on facts
and circumstances known at the time.
Registration costs for patents are part
of the expenditure for research and development projects. Therefore, registration costs for patents are expensed when incurred
as long as the research and development project concerned does not meet the criteria for capitalization.
Property, plant and equipment
Equipment is shown at historical acquisition
cost, less accumulated depreciation and any accumulated impairment losses. Historical costs include expenditures that are directly
attributable to the acquisition of the property, plant and equipment. Depreciation is calculated using a straight-line method to
write off the cost of each asset to its residual value over its estimated useful life as follows:
|Leasehold improvements / furniture