Company: CNTB
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001835268-25-000014
Chunk: 260

Company: Connect Biopharma Holdings Ltd
Filing Date: 2025-03-31
Form: 10-K
Item: Item 8
Chunk 260
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 of satisfying the related performance obligation, this payment is recorded as a contract liability. Contract liabilities are classified as either current or non-current in the consolidated balance sheets based on the timing of when the Company expects to satisfy the performance obligation and recognize the revenue.

117

Research and Development ExpenseAll research and development costs are expensed in the period incurred. Research and development expense primarily consists of personnel and related costs, share-based compensation expense, fees paid to outside service providers and consultants, facilities costs and materials used in clinical and preclinical trials and research and development.The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial or services provided and the invoices received from its external service providers. When the Company makes payments in advance of services being provided, it records those amounts as prepaid expenses on its consolidated balance sheets and expense them as the services are rendered. In the case of clinical trials, a portion of the estimated cost normally relates to the projected cost to treat a patient in the trials, and this cost is recognized based on the number of patients enrolled in the trial. Other indirect costs are generally recognized on a straight-line basis over the estimated period of the study. As actual costs become known, the Company adjusts its accruals accordingly.Patent CostsWe incur outside legal fees in connection with filing and maintaining our various patent applications and issued patents. All patent costs are expensed as incurred and are included in general and administrative expense in the consolidated statements of operations and comprehensive loss.Share-Based Compensation ExpenseWe estimate the fair value of each option grant using the binomial option pricing model. This fair value is then amortized using the straight-line single-option method of attributing the value of share-based compensation to expense over the requisite service periods of the awards. Forfeitures are accounted for, as incurred, as a reversal of share-based compensation expense related to awards that will not vest. The fair value of each employee share purchase right is estimated on the grant date using the Black-Scholes option pricing model. The estimated fair value of each purchase right is then expensed on a straight-line basis over the requisite service period, which is generally the purchase period. The binomial option pricing model and the Black-Scholes option pricing model require inputs of complex and subjective assumptions, including each option’s expected life and price volatility of the underlying shares.Government GrantsThe Company has received research grants under which it is reimbursed for specific research and development activities. We recognize government grants when there is reasonable assurance of compliance with grant conditions and receipt of