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Intangible Assets

6 Months Ended

Jun. 30, 2020

8.	Intangible Assets

The Company’s intangible assets consist of the following:


	June 30,		December 31,
	2020		2019

License agreements	$	1,080	$	1,067
Less: accumulated amortization		(696)		(647)
License agreements, net	$	384	$	420

Trademarks		350		334

Patents		1,033		845
Less: accumulated amortization		(107)		(84)
Patents, net	$	926	$	761
Intangible assets, net	$	1,660	$	1,515

License agreements are being amortized over periods ranging from 17-20 years. Patent costs are being amortized over periods up to 20 years. Amortization expense was approximately $36 and $30 for the three months ended June 30, 2020 and 2019, respectively. Amortization was approximately $72 and $56 for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, future amortization of license agreements and patents are as follows:


Year Ending December 31,
2020 (excluding six months ended June 30, 2020)	$	76
2021		154
2022		154
2023		112
2024		54
Thereafter		760
TOTAL	$	1,310

License Agreements

The Company has entered into multiple license agreements (together, the “License Agreements”) with the University of Florida Research Foundation and the University of Texas at Austin. Under the terms of the License Agreements, the Company acquired exclusive worldwide licenses for underlying technology used in repairing and regenerating nerves. The licensed technologies include the rights to issued patents and patents pending in the United States and international markets. The effective term of the License Agreements extends through the term of the related patents and the agreements may be terminated by the Company with 60 days’ prior written notice. Additionally, in the event of default, licensors may terminate an agreement if the Company fails to cure a breach after written notice. The License Agreements contain the key terms listed below:

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Axogen pays royalty fees ranging from 1% to 3% under the License Agreements based on net sales of licensed products. One of the agreements also contains a minimum royalty of $12.5 per quarter, which may include a

credit in future quarters in the same calendar year for the amount the minimum royalty exceeds the royalty fees. Also, when Axogen pays royalties to more than one licensor for sales of the same product, a royalty stack cap applies, capping total royalties at 3.75%;

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If Axogen sublicenses technologies covered by the License Agreements to third parties, Axogen would pay a percentage of sublicense fees received from the third party to the licensor. Currently, Axogen does not sublicense any technologies covered by License Agreements. The Company is not considered a sub-licensee under the License Agreements and does not owe any sub-licensee fees for its own use of the technologies;

●

Axogen reimburses the licensors for certain legal expenses incurred for patent prosecution and defense of the technologies covered by the License Agreements; and

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Currently, under the University of Texas at Austin’s agreement, Axogen would owe a milestone fee of $15 upon receiving a Phase II Small Business Innovation Research or Phase II Small Business Technology Transfer grant involving the licensed technology. The Company has not received either grant and does not owe such a milestone fee. A milestone fee to the University of Florida Research Foundation of $125 is due if Axogen receives FDA approval of its Avance Nerve Graft, a milestone fee of $25 is due upon the first commercial use of certain licensed technology to provide services to manufacture products for third parties and a milestone fee of $10 is due upon the first use to manufacture products that utilize certain technology that is not currently incorporated into Axogen products.

Royalty fees were approximately $436 and $547 during the three months ended June 30, 2020 and 2019, respectively, and approximately $929 and $996 during the six months ended June 30, 2020 and 2019, respectively, and are included in sales and marketing expense on the accompanying condensed consolidated statements of operations.