Company: CRVO
Filing Date: 2025-03-17
Form Type: 10-K
Source: 0001437749-25-007829
Chunk: 132

Company: CervoMed Inc.
Filing Date: 2025-03-17
Form: 10-K
Item: Item 8
Chunk 132
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3 inputs:

                                                                      Year Ended December 31,                   
                                                                      2023                                      
 ────────────────────────────────────────────────────────────────────────────────────────────────────────────────
  Balance as of January 1, 2023                                       $                             12,414,000  
  Fair value adjustment                                                                            ( 5,424,251  
  Reclassification to additional paid in capital upon conversion                                   ( 6,989,749  
  Balance as of December 31, 2023                                     $                                      —  

These Convertible Notes are no longer outstanding as of December 31, 2024 and 2023.

Valuation techniques used to measure fair value maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The Convertible Notes are classified within Level 3 of the fair value hierarchy because the fair value measurement is based, in part, on significant inputs not observed in the market.

There were no transfers among Level 1, Level 2 or Level 3 categories in the years ended December 31, 2024 and 2023.

Note 6. Significant Agreements and Contracts

Vertex Option and License Agreement

In August 2012, the Company entered the Vertex Agreement, as amended, to acquire an exclusive license to develop and commercialize a drug candidate, “ VX-745,” from Vertex. In August 2014, the Company exercised its option to acquire the license and paid an option fee of $100,000, which was expensed as incurred as a component of research and development expense.

The Vertex Agreement granted the Company the exclusive worldwide use of VX-745 in the field of diagnosis, treatment and prevention of AD and related CNS disorders in humans.

As part of the Vertex Agreement, the Company is obligated to make certain payments totaling up to approximately $117.0million upon achievement of certain regulatory and sales milestones, and royalties on net sales of products on indications covered by the Vertex Agreement. The first expected milestone events concern filing of an NDA with the FDA for marketing approval of neflamapimod (i. e., VX-745) in the U. S., or a similar filing for a non-U. S. major market, as specified in the Vertex Agreement, and such royalties will be on a sliding scale of percentages of net sales in the low- to mid-teens, depending on the amount of net sales in the applicable years. The Company is also obligated to make a milestone payment to Vertex upon net sales reaching a certain specified amount in any