Significant agreements

9 Months Ended

Sep. 30, 2024

Significant agreements

Significant agreements

8. Significant agreements

The Company’s significant agreements are described in Note 9 of the December 31, 2023 consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2023. During the three and nine months ended September 30, 2024, there were no material changes to the terms of the Company’s collaboration agreements with Neurocrine and the Company did not enter into any new collaboration or license agreements. On September 3, 2024, the Company entered into an amendment to its existing option and license agreement with Novartis dated March 4, 2022 (the “2022 Novartis Option and License Agreement”). The Company recorded collaboration revenue of $24.6 million and $4.6 million during the three months ended September 30, 2024 and 2023, respectively.

The Company recorded collaboration revenue of $73.7 million and $159.9 million during the nine months ended September 30, 2024 and 2023, respectively.

2022 Novartis Option and License Agreement

On September 3, 2024 (the “Amendment Effective Date”), the Company and Novartis entered into an amendment (the “Novartis Amendment”) to the 2022 Novartis Option and License Agreement. Pursuant to the Novartis Amendment, the Company and Novartis agreed to amend the 2022 Novartis Option and License Agreement to incorporate the grant from the Company to Novartis of an additional license (the “Novartis Direct License”) to a capsid discovered through the Company’s TRACER discovery platform (the “Novartis Direct Licensed Capsid”) for exclusive use with a certain gene (the “Novartis Direct License Target”) to develop and commercialize the Novartis Direct Licensed Capsid as incorporated into products containing a payload directed to the Novartis Direct License Target (“Novartis Direct Licensed Products”). As a result of the Novartis Amendment, the Novartis Direct License Target is now deemed a Licensed Target under the 2022 Novartis Option and License Agreement, as such term is defined therein, and the Novartis Direct License is subject to all other terms and conditions applicable to licenses granted to Novartis under the 2022 Novartis Option and License Agreement. Novartis agreed to pay to the Company a one-time fee of $15.0 million in consideration for the rights granted under the Novartis Amendment, which was received in October 2024. The Company evaluated the Novartis Amendment under ASC 606 and recorded $15.0 million as collaboration revenue in the three months ended September 30, 2024 since the consideration reflected the standalone selling price of the license that was delivered on the Novartis Amendment date, and there were no remaining undelivered performance obligations under the original 2022 Novartis Option and License Agreement. The Company is eligible to receive specified development, regulatory, and commercialization milestone payments of up to an aggregate of $130.0 million for the first Novartis Direct Licensed Product to achieve the corresponding milestone. On a Novartis Direct Licensed Product-by-Novartis Direct Licensed Product basis, the Company is also eligible to receive (a) specified sales milestone payments of up to an aggregate of $175.0 million per Novartis Direct Licensed Product and (b) tiered, escalating royalties in the mid- to high-single-digit percentages of annual net sales of each Novartis Direct Licensed Product.

2023 Neurocrine Collaboration Agreement

In April 2024, the Company announced that the joint steering committee with Neurocrine selected a development candidate for the glucocerebrosidase 1 gene therapy program for Parkinson’s disease and other GBA1-mediated diseases (the “GBA1 program”) under the collaboration and license agreement with Neurocrine entered into in January 2023 (the “2023 Neurocrine Collaboration Agreement”). The joint steering committee selection of a development candidate for the GBA1 Program triggered a $3.0 million milestone payment to the Company. The Company recorded the $3.0 million as collaboration revenue during the second quarter of 2024.

In September 2024, the Company announced that the joint steering committee with Neurocrine selected a development candidate in a gene therapy program for the potential treatment of an undisclosed neurological disease under the 2023 Neurocrine Collaboration Agreement, which triggered a $3.0 million milestone payment to the Company which was received in October 2024. The Company included the $3.0 million that had previously been constrained in the transaction price allocated to the program’s performance obligation in the three months ended September 30, 2024, accordingly, which resulted in a cumulative catch-up adjustment to collaboration revenue of approximately $2.0 million.

2023 Novartis Stock Purchase Agreement

Under the stock purchase agreement entered into in December 2023 (the “2023 Novartis Stock Purchase Agreement”), Novartis purchased 2,145,002 shares of common stock of the Company (the “Novartis Shares”) for an aggregate purchase price of approximately $20.0 million. The issuance of the Novartis Shares to Novartis pursuant to the 2023 Novartis Stock Purchase Agreement in January 2024 resulted in a premium of $0.7 million. The premium was allocated to the development and commercialization licenses granted to Novartis for two programs pursuant to the license and collaboration agreement with Novartis entered into in December 2023 and was recognized as collaboration revenue during the first quarter of 2024, upon the issuance of the Novartis Shares under the 2023 Novartis Stock Purchase Agreement.

2019 Neurocrine Collaboration Agreement

In February 2024, the Company announced that the joint steering committee with Neurocrine selected a lead development candidate for the gene therapy program for Friedreich’s ataxia (the “FA Program”) under the collaboration and license agreement with Neurocrine entered into in January 2019 (the “2019 Neurocrine Collaboration Agreement”), which triggered a $5.0 million milestone payment to the Company that was received in the first quarter of 2024. The Company included the $5.0 million that had previously been constrained in the transaction price allocated to the FA Program performance obligation in the three months ended March 31, 2024, accordingly, which resulted in a cumulative catch-up adjustment to collaboration revenue of $4.4 million.

Related Party Collaboration Receivable

The following table presents changes in the balances of the Company’s related party collaboration receivable and contract liabilities for the 2023 Neurocrine Collaboration Agreement and the 2019 Neurocrine Collaboration Agreement during the nine months ended September 30, 2024:

	Balance at						Balance at
	December 31, 2023		Additions		Deductions		September 30, 2024
		(in thousands)
Related party collaboration receivables	$	3,341	$	11,895	$	(11,522)	$	3,714
Contract liabilities:
Deferred revenue	$	75,240	$	1,592	$	(42,050)	$	34,782

The change in the related party collaboration receivable balance for the nine months ended September 30, 2024 is primarily driven by amounts owed to the Company for research and development services provided, offset by amounts collected during the period, for the 2023 and 2019 Neurocrine Collaboration Agreements. Deferred revenue activity for the period includes the recording of $1.6 million of deferred revenue during the nine months ended September 30, 2024 related to fixed transaction price allocation increases, offset by $42.1 million of collaboration revenue recognized on the proportional performance model during the period for the 2023 and 2019 Neurocrine Collaboration Agreements, which is classified as either current or non-current in the accompanying consolidated balance sheet based on the period the services are expected to be delivered.