Sale of Royalty Rights	6 Months Ended
Jun. 30, 2024
Sale of Royalty Rights [Abstract]
Sale of Royalty Rights	6. Sale of Royalty Rights In March 2007, Epitomics entered into an antibody candidate discovery and development agreement with ESBATech AG (“ESBATech”) (the “ESBATech Agreement”). ESBATech was acquired by Alcon Research, Ltd. in 2009 and later merged with Novartis AG (“Novartis”) in 2011. Novartis, the successor in interest to ESBATech, has successfully developed and commercialized one of those drug product candidates, brolucizumab-dbll, a single-chain antibody fragment (scFv) targeting all of the isoforms of VEGF-A, which was approved for commercial sale in 2019 and marketed under the brand name Beovu®. Upon commercialization, pursuant to the ESBATech Agreement, Novartis was obligated to pay Apexigen a very low single-digit royalty on net sales of the Beovu® product. However, Novartis disputed its obligation to pay these royalties on Beovu® sales under the ESBATech Agreement. As a result, Apexigen and the Company determined that any sales-based Beovu® product royalties received under the ESBATech Agreement should be fully constrained and reported royalties received by Apexigen and the Company as deferred revenues. The Company assessed this position at each period end to determine if events or changes in circumstances indicate a change in position. On March 25, 2024, the Company entered into the Fourth Amendment, Settlement Agreement, and Royalty Purchase Agreement (the “Settlement Agreement”) with Novartis, pursuant to which Novartis agreed to pay the Company $8.0 million to transfer its rights to future royalties on the net sales of Beovu®. Additionally, the dispute regarding Novartis’ obligation to pay royalties on Beovu® sales was resolved and royalties previously received by Apexigen and the Company agreed to be free from any reclaim rights. The ESBATech Agreement and the Settlement Agreement with Novartis both constitute contracts with a customer. Therefore, the Company has accounted for the payments received under these agreements as revenues in accordance with ASC 606, Revenue Recognition, (“ASC 606”). Upon execution of the Settlement Agreement, the $8.0 million payment was recorded as revenue within the accompanying unaudited condensed consolidated statements of operations and comprehensive loss for the six months ended June 30, 2024. Additionally, the related deferred revenues of $8.1 million previously constrained was also recorded as revenue within the accompanying unaudited condensed consolidated statements of operations and comprehensive loss for the six months ended June 30, 2024, as the uncertainty resulting in the revenue constraint has been resolved.

Sale of Royalty Rights

6 Months Ended

Jun. 30, 2024

6. Sale of Royalty Rights

In March 2007, Epitomics entered into an antibody candidate discovery and development agreement with ESBATech AG (“ESBATech”) (the “ESBATech Agreement”). ESBATech was acquired by Alcon Research, Ltd. in 2009 and later merged with Novartis AG (“Novartis”) in 2011.

Novartis, the successor in interest to ESBATech, has successfully developed and commercialized one of those drug product candidates, brolucizumab-dbll, a single-chain antibody fragment (scFv) targeting all of the isoforms of VEGF-A, which was approved for commercial sale in 2019 and marketed under the brand name Beovu®.

Upon commercialization, pursuant to the ESBATech Agreement, Novartis was obligated to pay Apexigen a very low single-digit royalty on net sales of the Beovu® product. However, Novartis disputed its obligation to pay these royalties on Beovu® sales under the ESBATech Agreement. As a result, Apexigen and the Company determined that any sales-based Beovu® product royalties received under the ESBATech Agreement should be fully constrained and reported royalties received by Apexigen and the Company as deferred revenues. The Company assessed this position at each period end to determine if events or changes in circumstances indicate a change in position.

On March 25, 2024, the Company entered into the Fourth Amendment, Settlement Agreement, and Royalty Purchase Agreement (the “Settlement Agreement”) with Novartis, pursuant to which Novartis agreed to pay the Company $8.0 million to transfer its rights to future royalties on the net sales of Beovu®. Additionally, the dispute regarding Novartis’ obligation to pay royalties on Beovu® sales was resolved and royalties previously received by Apexigen and the Company agreed to be free from any reclaim rights.

The ESBATech Agreement and the Settlement Agreement with Novartis both constitute contracts with a customer. Therefore, the Company has accounted for the payments received under these agreements as revenues in accordance with ASC 606, Revenue Recognition, (“ASC 606”). Upon execution of the Settlement Agreement, the $8.0 million payment was recorded as revenue within the accompanying unaudited condensed consolidated statements of operations and comprehensive loss for the six months ended June 30, 2024. Additionally, the related deferred revenues of $8.1 million previously constrained was also recorded as revenue within the accompanying unaudited condensed consolidated statements of operations and comprehensive loss for the six months ended June 30, 2024, as the uncertainty resulting in the revenue constraint has been resolved.