10. COLLABORATIVE ARRANGEMENTS

RiconPharma LLC

In July 2011, we entered into a collaborative arrangement with RiconPharma LLC (“RiconPharma”). Under the parties' master product development and collaboration agreement (the “RiconPharma Agreement”), we and RiconPharma agreed to collaborate in a cost, asset and profit sharing arrangement for the development, manufacturing, regulatory approval, and marketing of pharmaceutical products in the United States. In July 2016, we launched our Nilutamide product under the agreement.

In general, RiconPharma is responsible for developing the products and we are responsible for manufacturing, sales, marketing, and distribution of the products. The parties are jointly responsible for directing any bioequivalence studies. We are responsible for obtaining and maintaining all necessary regulatory approvals, including the preparation of all ANDAs.

Under the RiconPharma Agreement and unless otherwise specified in an amendment, the parties will own equally all the rights, title, and interest in the products. To the extent permitted by applicable law, we will be identified on the product packaging as the manufacturer and distributor of the product. During the term, both parties are prohibited from developing, manufacturing, selling, or distributing any products that are identical or bioequivalent to products covered under the agreement. The agreement may be terminated or amended under certain specified circumstances. In August 2016, we and Ricon agreed to a partial termination of the agreement, with only the Nilutamide product remaining under the agreement.

We recognize the costs incurred with respect to this agreement as expense and classify the expenses based on the nature of the costs. In the year ended December 31, 2016, we incurred $2.0 million in costs of sales related to the RiconPharma Agreement. In the years ended December 31, 2016, 2015, and 2014, we incurred $23 thousand, $31 thousand, and $0.4 million in research and development expenses related to the RiconPharma Agreement, respectively.

Sofgen Pharmaceuticals

August 2013 Sofgen Agreement

In August 2013, we entered into an agreement with Sofgen Pharmaceuticals (“Sofgen”) to develop Nimodipine (the “August 2013 Sofgen Agreement”). In general, Sofgen was responsible for the development, manufacturing, and regulatory submission of the product, and we made payments based on the completion of certain milestones. In December 2015, we launched Nimodipine under our label. Sofgen manufactures the drug and we market and distribute the product under our label in the United States, remitting a percentage of profits from sales of the drug to Sofgen.

Under the August 2013 Sofgen Agreement, Sofgen owns all the rights, title, and interest in Nimodipine. During the term, both parties are prohibited from developing, manufacturing, selling, or distributing any product in the United States that is identical or bioequivalent to the product covered under the agreement. The agreement may be terminated or amended under certain specified circumstances.

We recognize the costs incurred with respect to the August 2013 Sofgen Agreement as expense and classify the expenses based on the nature of the costs. In the year ended December 31, 2016, we incurred $0.6 million in cost of sales related to the August 2013 Sofgen Agreement. In the year ended December 31, 2015, we incurred an immaterial amount of cost of sales related to the August 2013 Sofgen Agreement. In the year ended December 31, 2016, we incurred an immaterial amount of research and development expense related to the August 2013 Sofgen Agreement. In the years ended December 31, 2015 and 2014, we incurred $0.4 million and $0.2 million in research and development expenses related to the August 2013 Sofgen Agreement, respectively.

April 2014 Sofgen Agreement

In April 2014, we entered into a second collaboration agreement with Sofgen to develop an oral soft gel prescription product (the “April 2014 Sofgen Agreement”). The product will be subject to an ANDA filing once developed. In general, Sofgen will be responsible for the development, manufacturing, and regulatory submission of the product, including preparation of the ANDA, and we will make payments based on the completion of certain milestones. Upon approval, Sofgen will manufacture the drug and we will market and distribute the product under our label in the United States, remitting a percentage of profits from sales of the drug to Sofgen.

Under the April 2014 Sofgen Agreement, Sofgen will own all the rights, title, and interest in the product. During the term, both parties are prohibited from developing, selling, or distributing any product in the United States that is identical or bioequivalent to the product covered under the agreement. The agreement can be terminated or amended under certain specified circumstances. The agreement’s initial term is ten years from the launch of the product, which term will automatically renew for two year terms until either party terminates the agreement.

We recognize the costs incurred with respect to the April 2014 Sofgen Agreement as expense and classify the expenses based on the nature of the costs. In the year ended December 31, 2016, we did not incur any research and development expenses related to this agreement. In the years ended December 31, 2015 and 2014, we incurred $37 thousand and $0.1 million in research and development expenses related to the agreement, respectively. No revenue has yet been recognized.