Note 6. Government grant funding and potential repayment commitments under recoverable cash advance grants (RCAs)

The Company has been awarded grants from a federal region of Belgium (the Walloon Region), and the European Union (collectively, the granting agencies) to fund research and development activities. The grants reimburse a percentage (55-100%) of actual qualifying expenditures. The Company periodically submits proof of qualifying expenditures to the granting agencies for approval and reimbursement. To date, the Company received funding under several grants which included no obligation to repay and two grants that include potential obligations to repay (RCAs).

As the granting agencies do not meet the definition of a customer under Topic 606, qualifying grants receipts are recognized as grant income within other income, net in the consolidated statements of operations and comprehensive income (loss). Grant income recognized under all of the grants for research and development activities totaled $2.7 million, $2.1 million and $10.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2023, the total amount that the granting agencies have agreed to fund in the future if the Company incurs qualifying research and development expenses under these grants is $7.6 million.

On July 20, 2017, the Company entered into an arrangement whereby the Walloon Region will provide the Company with up to $20.9 million for a research and development program to perform clinical validation of an A2A receptor antagonist drug candidate for immune-oncology (RCA-1). As of December 31, 2023, the Company has received $20.9 million under this grant.

On December 3, 2019, the Company entered into another recoverable cash advance grant with the Walloon Region (RCA-2) for up to $4.8 million to be received to fund a research and development program conducted to develop a TIGIT blocking antibody with anti-tumor properties. As of December 31, 2023, the Company has received $4.8 million under this grant.

Under the terms of both agreements, the Company must decide within 6 months after the end of the research period whether it will further pursue commercial development or out licensing of the drug candidate. The research period for RCA-1 ended in December 2021. The Company decided it would pursue commercialization or out licensing of RCA-1. The Company negotiated an extension on the research period for RCA-2 with the Walloon Region. The original research period for RCA-2 ended February 2021, and was extended to March 2022. The Company must repay 30% of the amount received under the grant by annual installments from 2023 to 2042 (the fixed annual repayments) unless the Company decides not to pursue commercial development or out licensing of the drug candidate, applies for a waiver from the Walloon Region justifying its decision based upon the failure of the program, and returns the intellectual property to the Walloon Region. Because of the requirement to repay 30% of the amounts received under the grant, the Company records the present value of such amounts as grants repayable on the consolidated balance sheets.

In addition, in the event that the Company receives revenue from products or services related to the results of the research, it has to pay to the Walloon Region a 0.33% royalty on revenue resulting from RCA-1 and a 0.15% royalty on revenue resulting from RCA-2 (increased from 0.12% effective December 2021). The maximum

amount payable to the Walloon Region under each grant, including the fixed annual repayments, the royalty on revenue, and the interest thereon, is twice the amount of funding received.

The Company assessed whether there is an obligation to make a royalty payment based on the probability of successful completion of the research and development and future sales and commercial success of the drug candidate. For the RCA-1, no grant repayable related to royalties was recorded as of December 31, 2023 or December 31, 2022. For the RCA-2, the Company recorded a royalty accrual of $0.8 million as of December 31, 2023, due to the upfront payment from the GSK Collaboration Agreement. The royalty accrual is included in the accrued expenses and other current liabilities in the consolidated balance sheet. The Company also recorded a royalty accrual of $0.8 million as of December 31, 2022.

The Company recorded grant income in the consolidated statement of operations and comprehensive income (loss) for the years ended December 31, 2023, 2022 and 2021 for amounts of grants received from the Walloon Region in the period during which the related qualifying expenses were incurred, net of any grants repayable recorded in the consolidated balance sheets.

The Company recorded receivables on the consolidated balance sheets related to amounts the Walloon Region owes the Company based on qualifying expenses incurred by the Company. The Company recorded deferred income in the consolidated balance sheets for amounts received from the Walloon Region in advance of incurring qualifying expenses.

The following table reflects activity for grant programs for the years ended December 31, 2023, 2022 and 2021 and end of year balances as of December 31, 2023, 2022 and 2021:


	RCA -1						RCA-2						Other Grants						Total
(In thousands)	2023		2022		2021		2023		2022		2021		2023		2022		2021		2023		2022		2021
Cash received	$	—	$	2,244	$	1,990	$	—	$	1,520		585	$	4,419	$	2,497	$	592	$	4,419	$	6,261	$	3,167
Grant income recognized		—		364		4,113		—		478		1,286		2,687		1,249		4,782		2,687		2,091	$	10,181
Grants receivable		—		5		1,832		—		—		1,097		—		996		1,093		—		1,001	$	4,022
Grants repayable		5,496		5,665		5,278		1,317		1,312		886		—		—		—		6,813		6,977	$	6,164

Of the total repayable balance, $0.2 million is the current portion and $6.6 million is the non-current portion. The current portion is recorded to accrued expenses and other liabilities.