Allergan In-Licensing Agreement

9 Months Ended

Sep. 30, 2017

In-Licensing Agreement [Abstract]

Allergan In-Licensing Agreement

ALLERGAN IN-LICENSING AGREEMENT

In 2009, Warner Chilcott Company, Inc., now a subsidiary of Allergan, acquired the commercial rights to Vitaros in the United States. In September 2015, the Company entered into a license agreement and amendment to the original agreement with Warner Chilcott Company, Inc., granting the Company exclusive rights to develop and commercialize Vitaros in the United States in exchange for a $1.0 million upfront payment, which was paid in September 2015, and an additional $1.5 million in potential regulatory milestone payments to Allergan. In September 2017, following the FDA acknowledgment of receipt of its NDA resubmission, the Company paid $1.5 million payment to Allergan for the regulatory milestone. This was recorded as research and development expense during the three and nine months ended September 30, 2017. Since the intangibles acquired in the license agreement do not have alternative future use, all costs incurred including the upfront payment and the regulatory milestone payment, were treated as research and development expense.

There are no further milestone payments owed by the Company to Allergan related to this license agreement. Upon the FDA’s approval, if any, of an NDA for Vitaros in the United States, Allergan has the right to exercise a one-time opt-in right to assume all future commercialization activities in the United States. If Allergan exercises its opt-in right, the Company is eligible to receive up to a total of $25.0 million in upfront and potential launch milestone payments, plus a high double-digit royalty in the ten to twenty percent range on Allergan’s net sales of the product. If Allergan does not exercise its opt-in right, the Company may commercialize the product and in return will pay Allergan a high double-digit royalty in the ten to twenty percent range on its net sales of the product.