REVENUE

3 Months Ended

Mar. 31, 2022

Revenue From Contract With Customer [Abstract]

REVENUE

8. REVENUE

Service Revenue

Takeda Agreement

In January 2020, the Company entered into a Research Collaboration and Option Agreement with Takeda (“Takeda Agreement”), which expired by its own terms in the year ended December 31, 2021.

The Company assessed the Takeda Agreement in accordance with ASC 606 and concluded that it represented a contract with a customer and was within the scope of ASC 606. The promised goods and services represented one combined performance obligation and the entire transaction price was allocated to that single combined performance obligation. In addition, the Company concluded that the exclusive option to obtain an exclusive license to LB-301 granted to Takeda under the Takeda Agreement (the “License Option”) did not provide any discounts or other rights. Terms related to an exclusive license negotiated after the exercise of the License Option would be part of a separate contract and reflect applicable standalone selling prices. As such, the Company concluded the License Option was not considered to be a material right.

Under the Takeda Agreement, Takeda was obligated to reimburse the Company for the costs incurred under the research plan. Costs incurred were billed by the Company to Takeda from time to time. The Company elected to recognize revenue under the "right to invoice" practical expedient based on the Company's right to invoice Takeda at an amount that approximated the value transferred to the customer and the performance completed to date. During the quarters ended March 31, 2022 and 2021, the Company recognized $0 and $461, respectively, in service revenue under the Takeda Agreement.

Daiichi Sankyo Agreement

In April 2021, the Company entered into a Research Collaboration and Exclusive Option Agreement (the “Daiichi Agreement”) with Daiichi for the development of gene therapy candidates for two indications based on the GeneRide platform (each, a “Daiichi Candidate”). Under the terms of the Daiichi Agreement, Daiichi will fund all research and development activities related to the development of the Daiichi Candidates under a mutually agreed research plan (the “Daiichi Research Plan”). The Daiichi Agreement also provides Daiichi with an exclusive, non-binding option for each Daiichi Candidate to negotiate in good faith for a certain period of time to enter into a license agreement with respect to each such Daiichi Candidate (the “Daiichi License Options”).

The Company assessed the Daiichi Agreement in accordance with ASC 606 and concluded that it represents a contract with a customer and is within the scope of ASC 606. The Company concluded that its conduct of research services under the Daiichi Research Plan, which includes a research data package, participation in various joint oversight committees, a research license and a materials transfer, represents a single combined performance obligation. The Company determined the transaction price totaled $2,000, which included an upfront payment of $1,000 and an additional $1,000 prepayment of the first-year research and development fees. The entire transaction price will be allocated to the single combined performance obligation, which is transferred over the expected term of the conduct of the research services. Terms related to exclusive licenses negotiated after the exercise of the Daiichi License Options will be part of a separate contract and reflect applicable standalone selling prices. As such, the Company concluded the Daiichi License Options are not considered to be a material right.

The upfront payment of $2,000 was recorded as deferred revenue and is being recognized as revenue over time in conjunction with the Company’s conduct of research services as the research services are the primary component of the combined performance obligation. Revenue associated with the upfront payment and ongoing research services will be recognized using an input-based measurement of actual costs incurred as a percentage of the estimated total costs expected to be incurred over the expected term of conduct of the research services. The Company believes this input-based method to recognize revenue best reflects the transfer of value to Daiichi. During the quarter ended March 31, 2022, the Company recognized $335 as service revenue under the Daiichi Agreement. As of March 31, 2022, there was $748 in deferred revenue related to the Daiichi Agreement, of which $703 was classified as current deferred revenue.  

Collaboration Revenue

CANbridge Agreement

In April 2021, the Company entered into an Exclusive Research Collaboration, License and Option Agreement (the “CANbridge Agreement”) with CANbridge.

Under the terms of the CANbridge Agreement, the Company granted CANbridge (a) an exclusive worldwide license to certain of the Company’s intellectual property rights, including those relating to sL65 to develop, manufacture and commercialize gene therapy

candidates for the treatment of Fabry and Pompe diseases (the “Fabry and Pompe License”), (b) an option to obtain an exclusive worldwide license to certain of the Company’s intellectual property rights, including those relating to sL65, to develop and commercialize gene therapy candidates for the treatment of two additional indications (the “Candidate Options”) and (c) an exclusive option to obtain an exclusive license to develop and commercialize LB-001 for the treatment of MMA (the “LB-001 Option”) in China, Taiwan, Hong Kong and Macau (“Greater China”). Pursuant to the CANbridge Agreement, LogicBio and CANbridge are collaborating to develop the gene therapy candidates referenced in (a) above for the treatment of Fabry and Pompe diseases plus, upon CANbridge’s exercise of the applicable Candidate Options, two additional indications under a mutually agreed research plan (the “CANbridge Research Plan”).

Under the CANbridge Agreement, the Company received an upfront, non-refundable and non-creditable payment of $10,000 from CANbridge a portion of which was paid to a third party under certain of the Company’s in-licensing obligations. In addition, CANbridge is obligated to reimburse the Company for research and development costs incurred by the Company for activities related to the development of the gene therapy candidates for Fabry and Pompe diseases under the CANbridge Research Plan.

The Company is eligible to receive up to $542,000 in aggregate from CANbridge contingent on the achievement of specified clinical, regulatory and sales milestones relating to the named gene therapy candidates for Fabry and Pompe diseases, the additional indications for which CANbridge exercises the Candidate Options, and the payment of any option exercise fees. The Company is also eligible to receive up to $49,000 in aggregate clinical, regulatory and sales milestones for LB-001, subject to the exercise of the LB-001 Option, and the payment of the LB-001 Option exercise fee. CANbridge is obligated to pay to the Company royalties based on an escalating tiered, mid- to high-single digit percentage of the annual worldwide net sales for each non-LB-001 indication pursued. In addition, CANbridge will pay to the Company royalties based on an escalating tiered, high-single digit to mid-double digit percentage of the annual Greater China net sales for LB-001 for the treatment of MMA, subject to the exercise of the LB-001 Option.

The Company applied ASC Topic 808, Collaborative Arrangements (“ASC 808”) and determined that the CANbridge Agreement is within the scope of ASC 808. Furthermore, the Company determined that certain aspects of the CANbridge Agreement represented a vendor-customer relationship as CANbridge represents a customer for certain activities. As such, the Company applied the relevant guidance from ASC 606 to evaluate the appropriate accounting for the vendor-customer aspects of the CANbridge Agreement. In accordance with ASC 606, the Company identified its performance obligation as a grant of a license to CANbridge for certain of its intellectual property rights, including those relating to sL65, and its conduct of research services under the CANbridge Research Plan, which includes participation in various joint oversight committees and a technology transfer. The Company determined that its grant of a license to CANbridge to certain of its intellectual property subject to certain conditions was not distinct as it does not have stand-alone value to CANbridge apart from the services to be performed by the Company pursuant to the CANbridge Agreement. A third party would not be able to provide research and development services due to the specific nature of the intellectual property and knowledge required to perform the services, and CANbridge could not benefit from the license without the corresponding services. The Company also concluded that the LB-001 Option and Candidate Options were not provided to CANbridge at a significant discount. The terms of the options, including the upfront exercise fee and applicable milestone payments, reflected applicable standalone selling prices at the time of the CANbridge Agreement. As such, the Company concluded that none of the options was considered to be material rights and, as such, were not performance obligations.  

Accordingly, the Company determined that its grant of a license to CANbridge and its conduct of research and development services under the CANbridge Research Plan should be accounted for as one combined performance obligation, and that the combined performance obligation is transferred over the expected term of the conduct of the research and development services. 

In accordance with ASC 606, the Company determined that the initial transaction price under the CANbridge agreement was $10,878, consisting of the upfront, non-refundable and non-creditable payment of $10,000 and an upfront payment of estimated quarterly research costs $878. The upfront payment of $10,878 was initially recorded as deferred revenue and, along with payments related to the Company’s conduct of research services under the CANbridge Research Plan, will be recognized as revenue using an input-based measurement of actual costs incurred as a percentage of the estimated total costs expected to be incurred over the expected term of conduct of the research services. The Company believes this input-based method to recognize revenue best reflects the transfer of value to CANbridge. The Company recorded the initial $878 prepayment of the quarterly research and development fees as deferred revenue, and such fees will be recognized as revenue as the research services are delivered.

The Company also assessed the effects of variable elements including the likelihood of receiving (i) various clinical, regulatory and commercial milestone payments, and (ii) royalties on net sales of any product candidate. Based on its assessment, the Company concluded that, based on the likelihood of these uncertain events occurring, there was not a significant variable element included in the transaction price. Accordingly, the Company has not assigned a transaction price to these variable elements given the substantial uncertainty related to their achievement and has not assigned a transaction price to any CANbridge milestone or royalties.

The Company recognized revenue of $2,481 under the CANbridge Agreement during the quarter ended March 31, 2022. As of March 31, 2022, aggregate deferred revenue related to the CANbridge Agreement was $10,804 of which $7,991 was classified as current. Both the current and non-current deferred revenue amounts will be recognized during the expected term of the conduct of research and development services. As a direct result of the Company’s entry into the CANbridge Agreement, the Company incurred $775 in sublicense fees to certain of its existing licensors which was expensed to research and development expense during the second quarter of 2021.