and commercialization of one selected second generation vaccine. ACI-35.030 and JACI-35.054 are active therapeutic vaccines stimulating
the patient’s immune system to produce a polyclonal antibody response against phosphorylated Tau protein. In July 2017,
AC Immune and Janssen entered into a Second Amendment to the December 2014 License, Development and Commercialization Agreement.
The Amendment allows for the alignment of certain payment provisions with the new Development Plan and Research Plan activities.
AC Immune and Janssen will jointly share R&D costs until the completion of the first Phase 2b.
Under the terms of the agreement, Janssen
may terminate the agreement at any time after completion of the first Phase 1b clinical study by providing 90 days’ notice
to us. If not otherwise terminated, the Agreement shall continue until the expiration of all royalty obligations as outlined in
The agreement also allows for the expansion
to a second indication based on the same anti-Tau vaccine program and based on intellectual property related to this program.
The Company received a CHF 25.9 million
up-front, non-refundable license fee which we recognized as revenue in 2014. In May 2016, we received a CHF 4.9 million payment
for reaching a clinical milestone in the Phase 1b study. As we met all performance obligations on reaching the milestone, we have
recognized this income as revenue.
AC Immune assessed this arrangement in
accordance with IFRS 15 and concluded that Janssen is a customer. The Company identified the following performance obligations
under the contract: (i) a right-to-use license and (ii) research and development services including a Development and CMC work
plan. The Company considered the research and development capabilities of Janssen, Janssen’s right to sublicense, and the
fact that the research and development services are not proprietary and can be provided by other vendors, to conclude that the
license has stand-alone functionality and is distinct. The Company’s obligation to perform research and development
services does not significantly impact or modify the licenses’ granted functionality. Based on these assessments, the
Company identified the license and the research and development services as the performance obligations at the inception the arrangement,
which were deemed to be distinct in the context of the contract.
At execution of the agreement, the transaction
price included only the CHF 25.9 million up-front consideration received. At inception, none of the clinical, regulatory or
commercial milestones has been included in the transaction price, as all milestone amounts were fully constrained. The Company
did receive a CHF 4.9 million payment for reaching a clinical milestone in the first Phase 1b study in May 2016. The Company could
also receive up to more than CHF 458 million in clinical, regulatory and commercial milestones as well as tiered, high-single digit
to mid-double digit royalties on aggregate net sales of products. In assessing that future clinical, regulatory or commercial milestones
are fully constrained, the Company considered numerous factors to determine that these milestones are not highly probable to obtain,
including that receipt of the milestones is outside the control of the Company and contingent upon success in future clinical trials
and the licensee’s efforts. Any consideration related to sales-based milestones (including royalties) will be recognized
when the related sales occur as they were determined to relate predominantly to the license granted to Janssen and therefore have
also been excluded from the transaction price. The Company will re-evaluate the transaction price in each reporting period
and as uncertain events are resolved or other changes in circumstances occur.
For the years ended December 31, 2018,
2017 and 2016, we have recognized revenues totaling CHF 2.2 million, CHF 1.2 million and CHF 6.6 million, respectively.
Tau-PET imaging agent in AD –2014 agreement
with Life Molecular Imaging (formerly Piramal Imaging SA)
In May 2014, AC Immune SA entered into
an agreement, our first diagnostic partnership with Life Molecular Imaging (“Life Molecular”), the former Piramal Imaging
SA. The partnership with Life Molecular is an exclusive, worldwide licensing agreement for the research, development and commercialization
of the Company’s Tau protein positron emission tomography (PET) tracers supporting the diagnosis and clinical management
of AD and potential Tau-related disorders and includes upfront and sales milestone payments totaling up to EUR 157 (CHF 179)
million, plus royalties on sales at a percentage rate ranging from mid-single digits to low double digits.