VITAROS^® LICENSING AND DISTRIBUTION AGREEMENTS

The following table summarizes the total revenue by commercialization partner recorded in the Company’s consolidated statements of operations (in thousands):



	Year Ended December 31,
	2015		2014		2013 ⁽¹⁾
Ferring	$	2,250	$	—	$	—
Sandoz	1,736		2,514		272
Takeda Pharmaceuticals International GmbH (“Takeda”)	398		141		—
Majorelle	245		4,150		—
Recordati	194		2,454		—
Bracco SpA (“Bracco”)	16		—		669
Warner Chilcott, now a subsidiary of Allergan, Inc. ("Allergan")					646
	$	4,839	$	9,259	$	1,587

⁽¹⁾ Certain revenues related to the Company’s former subsidiaries, Scomedica SAS, NexMed Europe SAS and NexMed Pharma SAS (the “French Subsidiaries”), are not shown in the table above since they were unrelated to any of the Company’s commercialization partners.

The following table summarizes the potential future milestones the Company is eligible for by commercialization partner (in thousands) as of December 31, 2015:



Commercialization Partner	Regulatory Milestones ⁽¹⁾		Commercial Launch Milestones ⁽¹⁾		Sales Milestones ⁽¹⁾		Total
Sandoz	$	319	$	1,500	$	45,613	$	47,432
Recordati	—		1,093		37,692		38,785
Takeda	437		—		36,600		37,037
Allergan	—		25,000		—		25,000
Majorelle	2,000		—		16,934		18,934
Ferring	2,000		—		14,000		16,000
Abbott Laboratories Limited, now a subsidiary of Mylan N.V. (“Mylan”)	225		—		13,000		13,225
Bracco	—		—		4,916		4,916
Neopharm Scientific Limited (“Neopharm”)	250		—		4,000		4,250
Elis Pharmaceuticals Limited (“Elis”)	100		—		1,900		2,000
	$	5,331	$	27,593	$	174,655	$	207,579

⁽¹⁾ Certain contractual amounts have been converted to USD based on the exchange rate as of 12/31/15.

Ferring

In October 2015, the Company entered into a distribution agreement with Ferring Pharmaceuticals, granting Ferring Pharmaceuticals the exclusive right to commercialize Vitaros^® for the treatment of erectile dysfunction (“ED”) in Latin America, including Central America, South America and certain Caribbean countries. In addition to the milestones above, the Company is eligible to receive high single-digit royalties on Ferring Pharmaceuticals’ sales of the product.

The Company concluded that the fair value of the Vitaros^® license was equal to the upfront payment of $2.3 million and recognized this as license fee revenue in its statement of operations during the fourth quarter of 2015.

Majorelle

In November 2013, the Company entered into a license agreement with Majorelle, granting Majorelle the exclusive right to market Vitaros^® for the treatment of ED in France, Monaco and certain countries in Africa. To date, the product has been approved for the treatment of ED in France, where it was launched in May 2015.

In December 2013, in a related negotiation, Majorelle agreed to make severance payments to certain former employees of the French Subsidiaries for an aggregate amount of approximately $2.0 million on behalf of the Company. In September 2014, the Company entered into a Manufacturing and Supply Agreement with Majorelle whereby the Company or its contract manufacturer will manufacture Vitaros^® product and supply the product to Majorelle on a cost plus basis. During the first quarter of 2015, Groupe Parima began manufacturing product for Majorelle under its own manufacturing and supply agreement.

The Company concluded that the fair value of the Vitaros^® license was equal to $4.0 million or the sum of the $1.8 million upfront payment received, the $0.2 million payment received for national phase approval in France, and the $2.0 million in severance payments made by Majorelle on behalf of the Company. During the second quarter of 2014, the Company recognized $3.0 million of the $4.0 million Vitaros^® license fair value as license fee revenue in its statement of operations. During the third quarter of 2014, the Company met the remaining contractual condition to deliver a specified amount of Vitaros^®and therefore, the remaining $1.0 million of revenue that had previously been deferred was recognized as license fee revenue in the Company’s consolidated statement of operations.

In addition to the milestones above, the Company is eligible to receive tiered low to high double-digit royalties on Majorelle’s sales of the product.

Bracco

In December 2010, the Company entered into a license agreement with Bracco, granting Bracco the exclusive right to commercialize Vitaros^® for the treatment of ED in Italy. The product was approved for the treatment of ED in Italy in November 2013 and launched in September 2015. In addition to the milestones above, the Company is eligible to receive tiered low to high double-digit royalties on Bracco’s sales of the product.

Sandoz

The Company entered into three license agreements with Sandoz, in February 2012, December 2013 and February 2015. The agreements are collectively referred to herein as the “Sandoz Agreements.” The first agreement granted Sandoz the exclusive right to commercialize Vitaros^® for the treatment of ED in Germany. The second agreement extended the exclusive license grant to the following countries: Austria, Belgium, Denmark, Finland, Iceland, Luxemburg, the Netherlands, Norway, Sweden and Switzerland (the “Expanded Territory”). The third agreement further extended the exclusive license grant to the following additional countries: Malaysia, Indonesia, the Philippines, Thailand, Taiwan, Vietnam, Hong Kong and Singapore (the “Expanded APAC Territory”). In June 2014, the Company also entered into a Manufacturing and Supply Agreement with Sandoz whereby the Company or its contract manufacturer will manufacture Vitaros^® and supply it to Sandoz on a cost plus basis.

Vitaros^®has been approved for the treatment of ED in Austria, Belgium, Denmark, Finland, Germany, Iceland, Luxemburg, the Netherlands, Norway and Sweden. To date, Sandoz has launched the product as Vitaros^® in Germany, Luxemburg and Sweden and as Vytaros^® in Belgium.

During the first quarter of 2015, the Company recognized $0.4 million as license fee revenue for the upfront payment received from Sandoz for the Expanded APAC Territory.

The Company recorded $2.0 million of deferred revenue for the upfront payment received from Sandoz for the Expanded Territory because Sandoz was entitled to a $2.0 million refund if certain regulatory and manufacturing conditions were not met. In December 2014, the Company met the manufacturing requirement and recognized $1.0 million of the upfront payment as license fee revenue. In September 2015, the Company met the regulatory condition and recognized the remaining $1.0 million of license fee revenue that had previously been deferred.

In addition to the milestones above, the Company is eligible to receive tiered mid-range to high double-digit royalties on Sandoz’s sales of the product.

Takeda

In September 2012, the Company entered into a license agreement with Takeda, granting Takeda the exclusive right to market Vitaros^® for the treatment of ED in the U.K. In September 2013, the Company entered into a Manufacturing and Supply Agreement with Takeda whereby the Company or its contract manufacturer will manufacture Vitaros^® product and supply the product to Takeda. The product has been approved for the treatment of ED in the U.K. and Takeda launched Vitaros^®in the U.K. in June 2014.

In addition to the milestones above, the Company is eligible to receive tiered low to high double-digit royalties on Takeda’s sales of the product.

Recordati

In February 2014, the Company entered into a license agreement with Recordati, granting Recordati the exclusive right to market Vitaros^® for the treatment of ED in Spain, Ireland, Portugal, Greece, Cyprus, the CEE Countries (Central and Eastern Europe), Russia and the other CIS Countries (former Soviet Republics), Ukraine, Georgia, Turkey and certain countries in Africa. The product has been approved for the treatment of ED in Ireland, Spain, Portugal and Romania. In June 2014, the Company entered into a Manufacturing and Supply Agreement with Recordati whereby the Company or its contract manufacturer will manufacture Vitaros^® product and supply the product to Recordati on a cost plus basis. During the third quarter of 2015, Groupe Parima began manufacturing product for Recordati under its own manufacturing and supply agreement. Recordati launched the product as Virirec^™ in Spain in May 2015.

In addition to the milestones above, the Company is eligible to receive tiered low to high double-digit royalties on Recordati’s sales of the product.

Mylan

In January 2012, the Company entered into a license agreement with Abbott Laboratories Limited, now a subsidiary of Mylan, granting Mylan the exclusive right to commercialize Vitaros^® for the treatment of ED in Canada. The product was approved for the treatment of ED by Health Canada in late 2010. In addition to the milestones above, Company is eligible to receive tiered low single digit to high double-digit royalties on Mylan’s sales of the product.

Elis

In January 2011, the Company entered into a license agreement with Elis, granting Elis the exclusive rights to market Vitaros^® for the treatment of ED in the United Arab Emirates, Oman, Bahrain, Qatar, Saudi Arabia, Kuwait, Lebanon, Syria, Jordan, Iraq and Yemen. In addition to the milestones above, the Company is eligible to receive tiered mid-range to high double-digit royalties based on Elis’ sales of the product.

Neopharm

In February 2011, the Company entered into a license agreement with Neopharm, granting Neopharm the exclusive rights to market Vitaros^® for the treatment of ED in Israel and the Palestinian Territories. In addition to the milestones above, the Company is eligible to receive tiered mid-range to high double-digit royalties based on Neopharm’s sales of the product.

Global Harvest

In June 2009, the Company entered into a license agreement with Global Harvest, granting Global Harvest the exclusive rights to market Vitaros^® for the treatment of ED in Australia and New Zealand. The Company is eligible to receive low single-digit royalty payments on Global Harvest’s sales of the product. Global Harvest filed for approval with the Therapeutic Goods Administration in Australia in December 2014 but withdrew the submission in January 2016, pending resolution of certain review issues. The Company expects they will resubmit upon resolution of those issues.