An accrual of CHF 1.8 million and CHF 1.1
million was recognized for performance-related remuneration within Accrued payroll expenses for 2018 and 2017, respectively.
For the year ended December 31, 2018 and
2017, the Company has recorded CHF 0.4 million in deferred income in relation to research funding commitments from Biogen.
On January 4, 2016, September 13, 2016
and January 26, 2018 for fiscal years 2016, 2017 and 2018, respectively, AC Immune obtained separate funding commitment notices
from the LuMind Research Down Syndrome Foundation (“LuMind”) totaling USD 200 thousand in each instance. Per the Research
Grant Agreement, AC Immune has an obligation to reimburse LuMind for an amount equal to 125% of the then funding commitment made
by LuMind to AC Immune.
On October 31, 2018, LuMind and the Company
modified the repayment terms in an effort to fund a Down Syndrome Clinical Trials Network. The repayment terms were modified such
that the Company will repay the outstanding balance in three installments in 2018, 2019 and 2020, with the total repayment to equal
the total the Company is to receive in funding with the additional 25% interest.
The Company accounted for this modification
as an extinguishment within IFRS 9 and recorded a CHF 0.1 million extinguishment gain with Finance result, net in the statements
of loss. The Company reclassified a certain portion of Long-term debt obligation from non-current to current liabilities in the
balance sheets to reflect the amended repayment terms. Additionally, per this modified payment term, the Company and LuMind memorialized
the receipt of one final USD 200 (CHF 199) thousand payment due from LuMind in 2019. The Company has recorded this as a finance
receivable and an increase to the obligation accordingly.
AC Immune has recorded in current liabilities
a Short-term debt obligation for the total USD 334 (CHF 332) thousand committed. As of December 31, 2018 and 2017, the Company
recorded a Long-term debt obligation for the total USD 187 (CHF 186) thousand and USD 500 (CHF 494) thousand, respectively.
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 IP 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 IP. 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 IP, which are classified as royalty revenues.
Licenses of intellectual property:
If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations
identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to the license when
the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are
sold in conjunction with a related service, the Company uses judgment to assess the nature of the combined performance obligation
to determine whether the combined performance obligation is satisfied over time or at a point in time. If the performance obligation
is settled over time, the Company determines the appropriate method of measuring progress for purposes of recognizing revenue from
non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the
measure of performance and related revenue recognition.
Milestone payments: At the inception
of each arrangement that includes development, regulatory and/or commercial milestone payments, the Company evaluates whether the
milestones are considered highly probable of being reached and estimates the amount to be included in the transaction price using
the most likely amount method. If it is highly probable that a significant revenue reversal would not occur in future periods,
the associated milestone value is included in the transaction price. These amounts for the performance obligations under the contract
are recognized as 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.