Company: ABUS
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001447028-25-000099
Chunk: 28

Company: Arbutus Biopharma Corp
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 1
Chunk 28
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 to develop, use, sell, have sold, offer for sale and import any product comprised of Licensed Product (as defined in the License Agreement) (the Qilu License) and (ii) drug supply obligations and manufacturing technology transfer (the Manufacturing Obligations). The Company determined that these two commitments are not distinct performance obligations for purposes of recognizing revenue as the manufacturing process is highly specialized and Qilu would not be able to benefit from the Qilu License without the Company’s involvement in the manufacturing activities until the transfer of the manufacturing know-how is complete. As such, the Company will combine these commitments into one performance obligation to which the transaction price will be allocated to and will recognize this transaction price associated with the bundled performance obligation over time using an inputs method based on labor hours expended by the Company on its Manufacturing Obligations.

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The Company determined the initial transaction price of the combined performance obligation to be $50.4 million, which includes the $40.0 million upfront fee, $4.4 million of withholding taxes paid by Qilu on behalf of the Company, the premium paid for the Share Transaction of $4.1 million. The Company determined the milestone payments to be variable consideration subject to constraint at inception. At the end of each subsequent reporting period, the Company will reevaluate the probability of achievement of the future development, regulatory, and sales milestones subject to constraint and, if necessary, will adjust its estimate of the overall transaction price. Any such adjustments will be recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. The following table outlines the transaction price and the changes to the related liability balance:Transaction PriceCumulative Collaboration Revenue RecognizedDeferred License Revenue(in thousands)Combined performance obligation$50,445 $38,850 $11,595 Less contract asset(1,973)Total deferred license revenue$9,622 The Company recognized $0.8 million and $0.2 million of revenue based on labor hours expended by the Company on its Manufacturing Obligations during the three months ended March 31, 2025 and 2024, respectively.As of March 31, 2025, the balance of the deferred license revenue was $11.6 million, which, in accordance with ASC 210-20, was partially offset by the contract asset associated with the manufacturing cost reimbursement of $2.0 million, resulting in a net deferred license revenue liability of $9.6 million. The Company incurred $0.