Life Molecular may terminate this Agreement
at any time after the first 18 months from the Effective Date of this Agreement upon 3 months prior written notice. If not otherwise
terminated, the Agreement shall continue until the date of expiration of the last to expire Royalty Term.
In connection with this agreement, AC Immune
received a EUR 500 (CHF 664) thousand payment which was fully recognized in 2015. In March 2017, we invoiced Life Molecular
for a EUR 1.0 (CHF 1.1) million milestone related to the initiation of “Part B” of the first-in-man Phase 1 clinical
trial for PSP (Progressive Supranuclear Palsy). As we met all performance obligations on reaching the milestone, we have recognized
this milestone as revenue in the first quarter of fiscal 2017. The Company is eligible to receive variable consideration related
to the achievement of certain clinical milestones totaling EUR 6 (CHF 7) million should the compound make it through to Phase
3 clinical studies. We are also eligible to receive potential regulatory and sales based milestones totaling EUR 150 (CHF 171)
million. The Company is also eligible for royalties from the mid-single digits to low-double digits.
AC Immune assessed this arrangement in
accordance with IFRS 15 and concluded that Life Molecular is a customer. The Company has identified that the right-to-use license
as the only performance obligation. The Company determined that transaction price based on the defined terms allocated to each
performance obligation specified in the contract.
The upfront payment constitutes the amount
of consideration to be included in the transaction price and has been allocated to the license. None of the clinical, regulatory
and commercial milestones have been included in the transaction price as these variable consideration elements are considered fully
constrained. As part of its evaluation of the constraint, the Company considered numerous factors, 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 these amounts have been determined to relate predominantly to the license granted to Life Molecular and therefore are recognized
at the later of when the performance obligation is satisfied or the related sales occur. The Company considered Life Molecular’s
right to sublicense and develop the Tau Protein PET tracers, and the fact that Life Molecular could perform the research and development
work themselves within the license term without AC Immune, to conclude that the license has stand-alone functionality and is distinct.
The Company believes that the contracted amount represents the fair value. The Company will re-evaluate the transaction price
in each reporting period and as uncertain events are resolved or other changes in circumstances occur.
In June 2018, Alliance Medical Group purchased
Piramal Imaging SA. The Company was rebranded as Life Molecular Imaging. The Company’s Agreement will continue under the
same terms and conditions with the new counterparty.
For the years ended December 31, 2018,
2017 and 2016, the Company has recognized nil, CHF 1.1 million and CHF 0.7 million, respectively.
Alpha-synuclein and TDP-43 PET tracers
in AD – 2016 agreement with Biogen
On April 13, 2016, AC Immune entered
into a non-exclusive research collaboration agreement with Biogen International GmbH, or Biogen. Under the agreement, we and Biogen
have agreed to collaborate in the research and early clinical development of our alpha-synuclein PET tracer program for Parkinson’s
disease and other synucleinopathies, and a second program for the identification, research and development of novel PET ligands
against TDP-43, a protein recently linked to neurodegeneration in diseases such as amyotrophic lateral sclerosis. In addition,
we have agreed to share the costs of the collaboration, with Biogen primarily funding the majority of research costs, subject to
a cap, which includes an upfront technology access fee and funding towards research and development personnel. We will own all
intellectual property rights to any invention relating to alpha-synuclein or TDP-43 PET tracers. The collaboration shall expire
in April 2019.
AC Immune assessed this arrangement in
accordance with IFRS 15 and concluded that Biogen is a customer. The Company has identified two performance obligations in our
Biogen collaboration: (i) technology access fee and (ii) research and development services. The Company determined the transaction
price based on the defined terms allocated to each performance obligation specified in the contract. In instances where the Company
is reimbursed for research and development contributions procured from third parties such as negotiated terms with clinical research
organizations, AC Immune records revenues for such services as it is acting as a principal in procuring the goods or