Quarterly report pursuant to Section 13 or 15(d)

New Accounting Standards Implemented

v3.10.0.1
New Accounting Standards Implemented
9 Months Ended
Sep. 30, 2018
Accounting Changes and Error Corrections [Abstract]  
New Accounting Standards Implemented
(2)
New Accounting Standards Implemented
 
Revenue Recognition
Effective January 1, 2018, we adopted ASC 606 using the modified retrospective transition method. The cumulative effect of applying the standard was an increase of $3.7 million to stockholders’ equity as of January 1, 2018. Our statement of operations for the quarterly period ended September 30, 2018 and our balance sheet as of September 30, 2018 are presented under ASC 606, while our statement of operations for the third quarter and nine months ended September 30, 2017 and our balance sheet as of December 31, 2017 are presented under ASC 605. See below for disclosure of the impact of the adoption of ASC 606 on our statement of operations and balance sheet for the quarterly period ended September 30, 2018, and the effect of changes made to our consolidated balance sheet as of January 1, 2018.
 
The table below presents the cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet due to the adoption of ASC 606.
 
 
Balance Sheet
  (in thousands)
 
December 31, 2017,

As Reported Under

ASC 605
 
 
Adjustments Due

to ASC 606
 
 
January 1, 2018

As Adjusted

Under ASC 606
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Current portion of deferred revenue
 
$
3,214
 
 
$
(602
)
 
$
2,612
 
Total current liabilities
 
 
3,214
 
 
 
(602
)
 
 
2,612
 
Deferred revenue, net of current portion
 
 
3,061
 
 
 
(3,061
)
 
 
-
 
Total liabilities
 
 
8,668
 
 
 
(3,663
)
 
 
5,005
 
Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated deficit
 
 
(359,792
)
 
 
3,663
 
 
 
(356,129
)
Total equity
 
$
170,098
 
 
$
3,663
 
 
$
173,761
 
 
The table below presents the impact of the adoption of ASC 606 on our statement of operations.
 
 
 
Third Quarter Ended September 30, 2018
 
STATEMENT OF OPERATIONS
 
 
 
 
 
 
 
 
 

(in thousands except per share amounts)
 
Under

ASC 605
 
 
Effect of

ASC 606
 
 
As Reported

Under ASC 606
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
License revenues
 
$
151
 
 
$
(151
)
 
$
-
 
Total revenues
 
 
1,860
 
 
 
(151
)
 
 
1,709
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss from operations
 
$
(16,765
)
 
$
(151
)
 
$
(16,916
)
Net loss
 
$
(16,268
)
 
$
(151
)
 
$
(16,419
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted loss per common share
 
$
(0.34
)
 
$
0.00
 
 
$
(0.34
)
 
 
 
Nine Months Ended September 30, 2018
 
STATEMENT OF OPERATIONS

  (in thousands except per share amounts)
 
Under

ASC 605
 
 
Effect of

ASC 606
 
 
As Reported

Under ASC 606
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
License revenues
 
$
452
 
 
$
(452
)
 
$
-
 
Total revenues
 
 
5,578
 
 
 
(452
)
 
 
5,126
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss from operations
 
$
(37,094
)
 
$
(452
)
 
$
(37,546
)
Net loss
 
$
(36,130
)
 
$
(452
)
 
$
(36,582
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted loss per common share
 
$
(0.77
)
 
$
(0.01
)
 
$
(0.77
)
 
The table below presents the impact of the adoption of ASC 606 on our balance sheet.
 
 
 
September 30, 2018
 
Balance Sheet

   (in thousands)
 
Under

ASC 605
 
 
Effect of

ASC 606
 
 
As Reported

Under ASC 606
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Current portion of deferred revenue
 
$
602
 
 
$
(602
)
 
$
-
 
Total current liabilities
 
 
10,933
 
 
 
(602
)
 
 
10,331
 
Deferred revenue, net of current portion
 
 
2,609
 
 
 
(2,609
)
 
 
-
 
Total liabilities
 
 
13,542
 
 
 
(3,211
)
 
 
10,331
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated deficit
 
 
(395,922
)
 
 
3,211
 
 
 
(392,711
)
Total stockholders’ equity
 
$
147,034
 
 
$
3,211
 
 
$
150,245
 
 
We received upfront cash payments for licenses of our technology in years 2008-2014. The revenue was recognized straight-line over the life of the patent. Our obligation was performed at the time the license was granted. Following the revenue recognition policies in accordance with ASC 606, we decreased the accumulated deficit by $3,663,000 as of January 1, 2018 and decreased deferred revenue by the same amount.
 
Royalty revenues will continue to be recognized in the period of sales. Royalty revenues recognized in the third quarter 
of 2018 were $22,000 and for the first nine months of 2018 were $89,000.
 
On October 16, 2017, we announced a collaborative agreement between nine Sanfilippo foundations to provide up to approximately $13.85 million of grants to Abeona in installments for the advancement of the Company’s clinical stage gene therapies for MPS IIIA and MPS IIIB, subject to the achievement of certain milestones. As of September 30, 2018, we received $5.0 million of these grants ($2.6 million in the fourth quarter 2017 and $2.4 million in the nine months of 2018) and recorded them first as deferred revenue. We recorded $2.6 million of the $3.4 million in grants as revenue in the quarter ended March 31, 2018, we recorded $0.8 million in grants as revenue in the quarter ending June 30, 2018 and we recorded $1.6 million in grants revenue in the quarter ending September 30, 2018.
 
We recorded revenue for Foundation Grants of $1,687,000 in the third quarter of 2018 and no revenues for the same period of 2017, an increase of $1,687,000. We recorded revenue for Foundation Grants of $5,037,000 in the first nine months of 2018 and no revenues for the same period of 2017, an increase of $5,037,000. We record revenue to match expenses for the advancement of the Company’s clinical stage gene therapies for MPS IIIA and MPS IIIB.
 
Restricted cash disclosure
In November 2016, the FASB issued ASU 2016-18,
Statement of Cash Flows (Topic 230): Restricted Cash
, requiring restricted cash and restricted cash equivalents to be included with cash and cash equivalents on the statement of cash flows when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. We adopted this standard during the first quarter of 2018. Restricted cash is now included as a component of cash, cash equivalents, and restricted cash on our unaudited condensed consolidated statements of cash flows. Restricted cash is recorded within other non-current assets in the accompanying unaudited condensed consolidated balance sheets. The inclusion of restricted cash increased beginning balances of the unaudited condensed consolidated statements of cash flows by $560,000 and $0, respectively, and the ending balances by $560,000 and $0, respectively, for the nine months ended September 30, 2018 and 2017.